Credit Rating Agencies: Commission adopts new rules on credit rating agencies

The EU framework for credit rating agencies, last amended in 2013, improves the transparency and objectivity of credit ratings and reduces the over-reliance on external credit ratings (CRAs Regulation, MEMO/13/571). In order to further enhance transparency in the credit rating industry, the Commission has adopted new rules to facilitate the use of ratings in the calculation of the capital requirements for banks and insurance companies. These rules are based on drafts submitted by the European Supervisory Authorities (ESAs). In particular, the Commission has adopted two Implementing Technical Standards (ITSs) that map the credit ratings scales used by CRAs to the risk weights categories under the Capital Requirement Regulation (CRR) and Solvency II Directive. The Commission amended the ESAs’ drafts of these two ITSs to ensure a better balance between prudential concerns and the need to avoid further concentration on the credit rating market. The Commission has also adopted a third ITS to map the credit rating scales for securitisation positions under the banking legal framework. These standards have today been published in the Official Journal of the EU and enter into force on the twentieth day following their publication.