The European Court of Auditors (ECA) has issued a report on ESMA’s role as the single supervisor of credit rating agencies (CRAs) in the EU. It finds that overall ESMA has laid down good foundations for supervising CRAs in a short period of time but there is still room for improvement. Amongst its findings the report recommends that ESMA should:
- adequately document its assessment of the requirements on credit rating methodologies during registration;
- improve the traceability of the risk identification process and follow up all high-risk areas;
- examine agencies’ systems for dealing with conflicts of interest, in particular relating to their analysts’ trading, and test the accuracy of information received about such conflicts;
- consider developing additional guidance on disclosure requirements; and
- publish all applicable legislation and relevant documents, and make its website more user-friendly.
(Source: ECA Reports on ESMA Supervision of CRAs)