Regulatory framework: European Union

The European Union legislation makes currently references to ratings and assessments from different sources:

• Credit Rating Agencies
• ECAI recognized Agencies
• Assessments from official Export Credit Agencies

Credit Rating Agencies (“CRAs”)

Legal Background

In September 2009, the European Parliament and the Council of Ministers adopted the regulation on Credit Rating Agencies (1060/2009) (hereafter “CRA regulation”) defining the regulatory regime applicable to Credit Rating Agencies („CRA“). This regulation was amended in 2010 in order to take into account the set up of the European Securities and Markets Authority (“ESMA”), solely responsible for the on-going supervision of CRAs from July 1^st, 2011.

In November 2011, the EU Commisssion tabled a new legislative proposal on Credit Rating Agencies (called “CRA III” thereafter). After negotiations between the European Parliament, the Council of Ministers and the EU Commission a compromise text was reached in December 2012.  The CRA regulation entered into force on June 20th, 2013. 

Registered or Certified Rating Agencies

Article 3 (1) a of the CRA regulation provides the following definition of credit ratings: ‘credit
rating’ means an opinion regarding the creditworthiness of an entity, a debt or financial obligation, debt security, preferred share or other financial instrument, or of an issuer of such a debt or financial obligation, debt security, preferred share or other financial instrument, issued using an established and defined ranking system of rating categories;

 According to Article 2 of the CRA regulation, rating agencies need to register with ESMA so that their ratings can be used for regulatory purposes. The list of registered or certified rating agencies in Europe can be looked up at ESMA’s website.

The links provided above will direct you to the respective credit rating agency profile on this website. for nearly all these agencies, we provide research information to our registered users.

Not covered by this regulation are private credit ratings, credit scores, credit ratings from export credit agencies (see below) and credit ratings from central banks.

Who can use ratings for regulatory purposes?

According to Article 4 of the CRA Regulation the following market participants MAY use ratings for regulatory purposes:

• Credit institutions as defined in Directive 2006/48/EC,
• investment firms as defined in Directive 2004/39/EC,
• insurance undertakings subject to the First Council Directive 73/239/EEC of24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance
• assurance undertakings as defined in Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance, reinsurance undertakings as defined in Directive 2005/68/EC of the European Parliament and the Council of 16 November 2005 on reinsurance, 
• undertakings for collective investements in transferable securities (UCITS) as defined in Directive 85/611/EEC
• institutions for occupational retirement provisions as defined in Directive 2003/41/EC
• Alternative investment funds as defined in Directive 2011/61/EU
• Central counterparties authorized in accordance with Regulation 2012/648/EU

For Registered Users

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