The Committee of European Securities Regulators (CESR) has published its response to the European Commission’s proposal for a Directive or Regulation that sets out a regulatory framework for credit rating agencies (CRAs).

CESR states in its response that it has not been able to produce a detailed analysis due to the short time period for consultation. CESR has therefore responded on 3 general points which are:

  • The scope of the proposal.
  • The proposal’s substantive provisions.
  • The supervisory issues that arise from the proposal.

CESR argues that the scope of the proposal should include an investor perspective, stating that European issuers cannot request ratings except from registered CRAs when offering their securities in the European Union.

CESR further argues that the proposal is very detailed and may not be easily adaptable to new market developments. In line with the Lamfalussy approach, CESR calls for limiting the Directive or Regulation to high-level principles, to be further detailed in level 2 implementing measures. CESR also argues that level 3 guidelines should be developed, as these will be necessary for taking into account the need for proportionality for smaller CRAs.

CESR argues that the Commission’s proposal does not provide a clear supervisory structure although it does acknowledge that its members have not yet reached agreement on the supervisory approach.

View CESR responds to the Commission's consultation on a proposed Directive/Regulation on CRAs, 16 September 2008