The European Communities (Credit Rating Agencies) Regulations, 2010 (S.I 247 of 2010) give effect to elements of the EU regulatory regime for credit rating agencies (CRAs).

Under the new regime, which will become fully applicable in December 2010, all CRAs, who would like their credit ratings to be used in the EU, will need to apply for registration.

It can be noted that the Financial Regulator’s UCITS Notices make specific reference to the use of credit ratings in a variety of areas, including when determining if money market instruments constitute valid collateral for repos etc. and as such legislation is of particular potential relevance for Irish funds.

Issues of conflicts of interest affecting ratings are addressed (for example, a CRA cannot also offer consultancy services). Furthermore, CRAs will be obliged to disclose the methodology and internal models and key rating assumptions they use to make their ratings.