The Committee of European Securities Regulators (CESR) has issued a press release stating that it has reviewed its work plan. This review follows an additional request by the European Commission for CESR to review several aspects of the rating process regarding structured finance instruments.
Having reviewed its work plan CESR states that it will gather additional data in its report and provide its views on the following areas of the structured finance market:
- Transparency of the rating methodologies used by credit rating agencies (CRAs).
- Human resources allocated to rating and monitoring.
- Periodic monitoring of the ratings and timeliness of rating actions.
- Potential conflicts of interest (i.e. remuneration structures of CRAs).
CESR will also work with the Committee of European Banking Supervisors on the role of CRAs within the context of the Basel II framework. CESR will also work with the US Securities and Exchange Commission on the main issues raised in the structured finance sector. CESR will also closely co-operate with the European Securities Markets Experts Group, the International Organization of Securities Commissions and the Committee on the Global Financial System, which are also analysing the role of CRAs in the structured finance market.
In order to meet the European Commission’s deadline for advice, CESR has set itself the following timetable:
- From October 2007 to January 2008 CESR will prepare a consultation paper on CRAs.
- The consultation period will be from mid February to March 2008. During the consultation period there may also be hearings with market participants.
- During April 2008 CESR will assess the responses to the consultation paper and prepare a final report.
- By mid May 2008 CESR will send its final report to the European Commission.