ESMA is seeking stakeholders’ views on the validation and review of Credit Rating Agencies’ (CRAs) methodologies. The discussion paper will help ESMA to develop its views on the quantitative and qualitative techniques used as part of the validation of methodologies required under the CRA Regulation. The CRA Regulation states that ‘a credit rating agency shall use rating methodologies that are rigorous, systematic, continuous and subject to validation based on historical experience, including back testing’. The discussion paper also asks for views on the quantitative and qualitative techniques required for a CRA to ‘review its credit ratings and methodologies on an ongoing basis and at least annually’.

The consultation closes on 19 February 2016.