The EU Commission recently proposed major changes to Regulation (EC) No 1060/2009 of September 16 2009 on credit rating agencies (Cra Regulation). The purpose of these changes was to reinforce competition between credit rating agencies (Cras); help avoid possible conflicts of interest under the issuer-pays model; enhance transparency and the quality of ratings; and promote the issuance of unsolicited ratings.
The proposed changes to the Cra Regulation also include an overhaul of the registration and supervision regimes for Cras. In addition to raising significant implementation issues for issuers and arranging banks, many market participants doubt that the proposed changes will assist in achieving their stated purpose.
Following in the footsteps of Rule 17g-5 of the Securities Exchange Act of 1934 in the US, the EU Commission's proposal requires issuers or related third parties (including arranging banks, sponsors, originators and servicers) (i) to provide to the ra appointed by them...