CRA: regulation with bite or toothless?

摘要

The EU's upcoming regulation on credit rating agencies (CRAs) - the so-called CRA II. It is the latest in a slew of activity from regulatory bodies around the world focused on credit rating agencies. WHO'S BEEN DOING WHAT? In October 2010, the Financial Stability Board (FSB) published its 'Principles for Reducing Reliance on CRA Ratings', endorsed by the G-20, which hopes to reduce the "mechanistic" reliance on ratings. In November, the European Commission (EC) launched a consultation on the FSB's proposals and added a few ideas to the mix, including a proposal for central bank-backed ratings or a new independent ratings agency, and different business models to mitigate any conflicts of interest in the current 'issuer pays' model. In December, the European Parliament passed into law tough new rules that require CRAs to comply with codes of conduct to minimise conflict of interest, ensure higher quality ratings and greater transparency of ratings and process. Sole supervisory responsibility for CRAs will pass to the newly established European Securities and Markets Authority (ESMA) in July 2011. It is not just Europe taking aim at the CRAs. In March, Singapore put forward proposals to regulate CRAs, followed, in April, by the introduction in Hong Kong of CRA regulation.