BETA

78 Amendments of Diogo FEIO related to 2011/0361(COD)

Proposal for a regulation
Recital 2

(2) The European Parliament issued a resolution on credit ratings agencies on 8 June 2011 calling for enhanced regulation on credit rating agencies. At an informal ECOFIN meeting of September 30 and October 1, 2010, the Council of the European Union acknowledged that further efforts should be made to address a number of issues related to credit rating activities, including the risk of over-reliance on credit ratings and the risk of conflict of interests ~~stemming from the remuneration model of rating agencies~~. The European Council of 23 October 2011 concluded that progress is needed on reducing overreliance on credit ratings.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 5 a (new)

(5a) Overreliance on external credit ratings occurs when financial institutions and institutional investors rely solely or mechanistically on ratings issued by credit rating agencies while neglecting their own due diligence and internal risk management obligations. Therefore, it is essential to reinforce the financial institutions and institutional investor's due diligence obligations and internal risk management obligations when acquiring financial products, especially complex or structured products. Financial regulation should also increase the disclosure obligations for issuers of financial products, especially for highly complex or structured products.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 5 b (new)

(5b) Overreliance on external credit ratings shall be reduced and all the automatic effects deriving from ratings should be gradually eliminated. Regulation should, therefore, encourage credit institutions and investment firms to put in place internal models of risk assessment and impose due diligence obligations upon investors.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 6

(6) Regulation (EC) No 1060/2009 already provided a first round of measures to address the question of independence and integrity of credit rating agencies and their credit rating activities. The objectives of guaranteeing the independence of credit rating agencies and of identifying, managing and, to the extent possible, avoiding any conflict of interest that could arise were already underlying several provisions of that Regulation in 2009. Whilst providing a sound basis, the existing rules do not appear to have had a sufficient impact in this regard. ~~Credit rating agencies still are not perceived as sufficiently independent actors.~~ The selection and remuneration of the credit rating agency by the rated entity (issuer- pays model) ~~engenders inherent~~might increase the risk of conflicts of interest, which are insufficiently addressed by the existing rules. Under this model, there are incentives for credit rating agencies to issue complacency ratings on the issuer in order to secure a long-standing business relationship guaranteeing revenues or in order to secure additional work and revenues. Moreover, relationships between the shareholders of credit rating agencies and the rated entities may cause conflicts of interest which are not sufficiently dealt with by the existing rules. ~~As a result, credit ratings issued under the issuer-pays model may be perceived as the credit ratings that suit the issuer rather than the credit ratings needed by the investor.~~ Without prejudice to the conclusions of the report to be submitted by the Commission on the issuer-pays model by December 2012 pursuant to Article 39(1) of Regulation (EC) No 1060/2009, it is essential to reinforce the conditions of independence applying to credit rating agencies in order to increase the level of credibility and independence of credit ratings ~~issued under the issuer-pays model~~.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 7

(7) The credit rating market shows that, traditionally, credit rating agencies and rated entities enter into long-lasting relationships. This raises the threat of familiarity, as the credit rating agency may become too sympathetic to the desires of the rated entity. In those circumstances, the impartiality of credit rating agencies over time could become questionable. Indeed, credit rating agencies mandated and paid by a corporate issuer are incentivised to issue overly favourable ratings on that rated entity or its debt instruments in order to maintain the business relationship with such issuer. Issuers are also subject to incentives that favour long-lasting relationships, such as the lock-in effect: an issuer may refrain from changing credit rating agency as this may raise concerns of investors regarding the issuer's creditworthiness. This problem was already identified in Regulation (EC) No 1060/2009, which required credit rating agencies to apply a rotation mechanism providing for gradual changes in analytical teams and credit rating committees so that the independence of the rating analysts and persons approving credit ratings would not be compromised. The success of those rules, however, was highly dependant on a behavioural solution internal to the credit rating agency: the actual independence and professionalism of the employees of the credit rating agency vis-à-vis the commercial interests of the credit rating agency itself. These rules were not designed to provide sufficient guarantee towards third parties that the conflicts of interest arising from the long-lasting relationship would effectively be mitigated or avoided. It therefore appears necessary to provide for a structural response having a higher impact on third parties. This could be achieved effectively by limiting the period during which a credit rating agency can continuously provide credit ratings on the same issuer or its debt instruments. Setting out a maximum duration of the business relationship between the issuer which is rated or which issued the rated debt instruments and the credit rating agency should remove the incentive for issuing favourable ratings on that issuer. Additionally, requiring the rotation of credit rating agencies as a normal and regular market practice should also effectively address the lock-in effect, where an issuer refrains from changing credit rating agency as this would raise concerns of investors regarding the issuer's creditworthiness. Finally, the rotation of credit rating agencies should have positive effects on the rating market as it would facilitate new market entries and offer existing credit rating agencies the opportunity to extend their business to new areas.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 7 a (new)

(7a) The recognition of a credit rating agency as an External Credit Assessment Institution (ECAI) should not increase the foreclosure of a market already dominated by three main undertakings. ECB, EBA and the national central banks, without making the process easier or less demanding, should provide for the recognition of more credit rating agencies as ECAI as a way to open the market to the entrance of new undertakings.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 8

(8) ~~Regular rotation of credit rating agencies issuing credit ratings on an issuer or its debt instruments should~~It is important to find ways to bring more diversity to the evaluation of the creditworthiness of the issuer that selects and pays that credit rating agency. Multiple and different views, perspectives and methodologies applied by credit rating agencies should produce more diverse credit ratings and ultimately improve the assessment of the creditworthiness of the issuers. For this diversity to play a role and to avoid complacency of both issuers and credit rating agencies, the maximum duration of the business relationship between the credit rating agency and the issuer paying must be restricted to a level guaranteeing regular fresh looks at the creditworthiness of issuers. Therefore, a time period of three years would seem appropriate, also considering the need to provide certain continuity within the credit ratings. The risk of conflict of interest increases in situations where the credit rating agency frequently issues credit ratings on debt instruments of the same issuer within a shA system of a mandatory double rating should be designed so that institutions, issuers or their related third parties and sovereigns always use at least two ECAI ratings for the regulatorty p~~eriod of time. In those cases, the maximum duration of the business relationship should be sho~~urposes set in legislation. Further to guarantee similar results. Hence, the business relationship should stop after a credit rating has rated ten debt instruments of the same issuer. However, in order to avoid imposing a disproportionate burden on issuers and credit rating agencies, no requirement to change credit more, alternatives shall be put in place so that institutions, issuers or their related third parties and sovereigns may, without restrating agency within the first 12 months of the business relationship should be imposed. Where an issuer mandates more than one credit rating agency, either because as an issuer of structured finance instruments he is obliged to do so, or on a voluntary basis, it should be sufficient that the strict rotation periods only apply to one of the credit rating agencies. However, also in this case, the business relationship between the issuer and the additional credit rating agencies should not exceed a period of six yearst, choose the first ECAI and the second shall be appointed by an independent authority, from all recognized ECAI. This shall not prevent the mandating party to use credit ratings from more than one credit rating agency.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 9

(9) The rule requiring rotation of credit rating agencies needs to be enforced in a credible manner to be meaningful. The rotation rule would not achieve its objectives if the outgoing credit rating agency were allowed to provide rating services to the same issuer again within a too short period of time. Therefore, it is important to provide for an appropriate period within which such credit rating agency may not be mandated by the same issuer to provide rating services. That period should be sufficiently long to allow the incoming credit rating agency to effectively provide its rating services to the issuer, to ensure that the issuer is truly exposed to a new scrutiny under a different approach and to guarantee that the credit ratings issued by the new credit rating agency provide enough continuity. That period should allow that an issuer cannot rely on comfortable arrangements with only two credit rating agencies that would replace each other on a continuous basis, as this could lead to maintaining the familiarity threat. Hence, the period during which the outgoing credit rating agency should not provide rating services to the issuer should generally be set at four years.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 10

(10) The change of credit rating agency inevitably increases the risk that knowledge about the rated entity acquired by the outgoing rating agency is lost. As a result, the incoming credit rating agency would have to make considerable efforts to acquire the knowledge necessary to carry out its work. However, a smooth transition should be ensured by establishing a requirement on the outgoing credit rating agency to transfer relevant information on the rated entity or instruments to the incoming credit rating agency.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 11

(11) Requiring issuers to regularly change the credit rating agency they mandate to issue credit ratings is proportionate to the objective pursued. This requirement only applies to certain regulated institutions (registered credit rating agencies) which provide a service affecting the public interest (credit ratings that can be used for regulatory purposes) under certain conditions (issuer-pays model). The privilege of having its services recognised as playing an important role in the regulation of the financial services market and being approved to carry out this function, entails the need to respect certain obligations in order to guarantee independence and the perception of independence in all circumstances. A credit rating agency which is prevented from providing credit rating services to a particular issuer would still be allowed to provide credit ratings to other issuersnstitutions, issuers or their related third parties and sovereigns to have a double rating - one from a chosen credit rating agency and a second from an appointed one - is proportionate to the objective pursued. This requirement only applies to certain credit ratings (those used for regulatory purposes) which provide a service affecting the public interest. In a market context where the ~~rot~~double rationg rule applies to all players, business opportunities will arise since all issuers would need to change credit rating agency. Moreover, credit rating agencies may always issue unsolicited credit ratings on the same issuer, capitalising on their experience. Unsolicited ratings are not constrained by the issuer-pays model and therefore are less affected by potential conflicts of interests. For issuers, the maximum duration of the business relationship with a credit rating agency or the rule on the employment of more than one credit rating agency also represents a restriction on their freedom to conduct their own business. However, this restriction is necessary on public-interest grounds considering the interference of the issuer-pays model with the necessary independence of credit rating agencies to guarantee independent credit ratings that can be used by investors for regulatory purposes. At the same time, these restrictions do not go beyond what is necessary and should rather be seen as an element increasing the issuer's creditworthiness towards other parties, and ultimately the marketthe appointed credit rating agency shall be chosen among all recognised ECAI. The appointment of the second credit rating agency by an independent authority shall favour smaller credit rating agencies already operating in the market and recognised.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 12

(12) One of the specificities of sovereign ratings is that the issuer-pays model generally does not apply. Instead, the majority of ratings are produced as unsolicited ratings, providing the basis for both solicited and unsolicited ratings of the financial institutions of the country concerned. It is therefore not necessary to require the rotation of credit rating agencies issuing sovereign ratings.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 13

(13) The independence of a credit rating agency vis-à-vis a rated entity ~~is also~~might be affected by possible conflict of interests of any of its significant shareholders with the rated entity: Aa shareholder of a credit rating agency could be a member of the administrative or supervisory board of a rated entity or a related third party. The rules of Regulation (EC) No 1060/2009 addressed this type of situation only as regards the conflicts of interest caused by rating analysts, persons approving the credit ratings or other employees of the credit rating agency. The Regulation was, however, silent as regards potential conflicts of interest caused by shareholders or members of credit rating agencies. With a view to enhancing the perception of independence of credit rating agencies vis-à-vis the rated entities, it is appropriate to extend the existing rules applying to conflicts of interest caused by employees of the credit rating agencies also to those caused by shareholders or members holding a significant position within the credit rating agency. Hence, the credit rating agency should abstain from issuing credit ratings, or should disclose that the credit rating may be affected, where a shareholder or member holding 10% of the voting rights of that agency is also a member of the administrative or supervisory board of the rated entity or has invested in the rated entity. Moreover, where a shareholder or member is in a position to significantly influence the business activity of the credit rating agency, that person should not provide consultancy or advisory services to the rated entity or a related third party regarding its corporate or legal structure, assets, liabilities or activitiesHence, the credit rating agency should disclose that the credit rating may be affected, where a shareholder or member holding 10% of the voting rights of that agency is also a member of the administrative or supervisory board of the rated entity or has invested in the rated entity.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 14

(14) The rules on independence and prevention of conflicts of interest, could become ineffective if credit rating agencies were not independent from each other. A sufficiently high number of credit rating agencies, unconnected with both the outgoing credit rating agency in case of rotation and with the credit rating agency providing credit rating services in parallel to the same issuer, is necessary for a workable application of those rules. In the absence of sufficient choice of credit rating agencies for the issuer in the current market, the implementation of these rules aimed at enhancing independence conditions would risk becoming ineffective. Therefore, it is appropriate to require a strict separation of the outgoing agency from the incoming credit rating agency in case of rotation as well as of the two credit rating agencies providing rating services in parallel to the same issuer. The credit rating agencies concerned should not be linked to each other by control, by being part of the same group of credit rating agencies, by being shareholder or member of or being able to exercise voting rights in any of the other agencies, or by being able to appoint members of the administrative, management or supervisory boards of any of the other credit rating agencies.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 14 a (new)

(14a) Credit rating agencies should establish, maintain, enforce, and document an effective internal control structure governing the implementation of policies and procedures to the prevention and control of possible conflicts of interest and to ensure the independence of ratings, analysts and rating teams regarding shareholders, administrative and management bodies and sales and marketing activities. Standard Operating Procedures (SOP) should be put in place on the topic of corporate governance, organizational, and management of conflict of interest. SOPs should be periodically reviewed and monitored to evaluate the effectiveness of the internal control structure and whether it should be updated.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 14 b (new)

(14b) Credit rating agencies shall submit an annual internal controls report to ESMA, which shall contain a description of the responsibility of management in establishing and maintaining an effective internal control structure and an assessment of the effectiveness of the internal control structure.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 15

(15) The perception of independence of credit rating agencies wcould be particularly ~~affect~~damaged should the same shareholders or members be investing in different credit rating agencies not belonging to the same group of credit rating agencies, at least if this investment reaches a certain size that could allow these shareholders or members to exercise a certain influence on the agency's business. Therefore, in order to ensure the ~~independence (and the~~ perception of independence) of credit rating agencies, it is appropriate to provide for ~~stricter~~more transparent rules regarding the relations between the credit rating agencies and their shareholders. For this reason, ~~no person should simultaneously hold a participation of 5% or more in more than one credit rating agency, unless the agencies concerned belong to the same group~~all 10 % or more shareholders should be publicly and periodically disclosed.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 16

(16) ~~The objective of ensuring sufficient independence of credit rating agencies entails that investors should not hold simultaneously investments of 5 % or more in more than one credit rating agency.~~ Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market requests that those persons controlling 510 % of the voting rights in a listed company results should disclose it to the public, because, inter alia, of the interest for investors to know about changes in the voting structure of such company. 510 % of the voting rights is considered therefore to be a major holding capable of influencing the voting structure in a company. It is therefore appropriate to use the 510 % level for the purposes of ~~restricting the simultaneous investment in more than one~~disclosure of shareholder's participations in credit rating agencyies. This measure cannot be considered disproportionate, given that all registered credit rating agencies in the Union are non- listed undertakings therefore not subject to the transparency and procedural rules that apply to listed companies in the EU. Often unlisted undertakings are governed by shareholders' protocols or agreements and the number of shareholders or members is usually low. Therefore, even a minority position in an unlisted credit rating agency could be influential. Nevertheless, in order to ensure that purely economic investments in credit rating agencies are still possible, this limitation to simultaneously investments in more than one credit rating agency should not be extended to investments channelled though collective investment schemes managed by third parties independent from the investor and not subject to his or her influence.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 17

(17) The ~~new rules limiting the duration of the business relationship between an issuer and the~~mandatory double rating and the recognition of ECAI status to more and smaller credit rating agenc~~y would~~ies can significantly reshape the credit rating market in the Union, which today remains largely concentrated. New market opportunities would arise for small and mid-size credit rating agencies, which would need to develop to take up those challenges in the first years following the entry into force of the new rules. Those developments are likely to bring new diversity into the market. The objectives and the effectiveness of the new rules would, however, be largely jeopardised if, during these initial years, large established credit rating agencies would prevent their competitors from developing credible alternatives by acquiring them. Further consolidation in the credit rating market driven by large established players would result in a reduction of the number of available registered credit rating agencies, thus creating selection difficulties for issuers at the moment in which they regulThe Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the Merger Regulation) is a specific legal instrument necessarly ~~need to appoint one or more new credit rating agencies and disturb~~to permit effective control of all concentrations ing t~~he smooth fun~~erms of their effecti on~~ing of the new rules. More importantly, further consolidation driven by large established credit rating agencies would particularly prevent the emergence of mo~~ the structure of competition in the Union. This Regulation shall therefore apply to all mergers and concentrations with a community dimension between cre di~~versity in the market~~t rating agencies.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 18

(18) The effectiveness of the rules on independence and prevention of conflict of interest which require that credit rating agencies should not provide for a long period of time credit rating services to the same issuer could be undermined if credit rating agencies where allowed to become directly or indirectly shareholders or members of other credit rating agencies.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 19

(19) It is important to ensure that relevant modifications to the rating methodologies do not result in less rigorous methodologies. For that purpose, issuers, investors and other interested parties should have the opportunity to comment on any intended relevant change of rating methodologies. This will help them to understand the reasons behind new methodologies and for the change in question. Comments provided by issuers and investors on the draft methodologies may provide valuable input for the credit rating agencies in defining the methodologies. Moreover, ESMA should verify and confirm the compliance of new rating methodologies with Article 8(3) of Regulation (EC) No 1060/2009 and the relevant regulatory technical standard before methodologies are applied in practice. ESMA should verify that the proposed methodologies are rigorous, systematic, continuous and subject to validation based on historical experience, including back-testingbe notified when new methodologies are applied in practice. However, this ~~ver~~notification ~~process~~ should not grant ESMA any power to judge the appropriateness of the proposed methodology or the content of the credit ratings issued following the application of the methodologies or to certify or pre-approve methodologies used by credit rating agencies.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 20

(20) Due to the complexity of structured finance instruments, credit rating agencies have not always succeeded in ensuring a sufficiently high quality of credit ratings issued on such instruments. This has led to a loss of market confidence in this type of credit ratings. In order to regain confidence it would be appropriate to require issuers or their related third parties to engage two different credit rating agencies for the provision of credit ratings on structured finance instruments, which could lead to different and competing assessments. This could also reduce the over-reliance on a single credit rating and enhance competition.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 23

(23) Investors, issuers and other interested parties should have access to up to date rating information on a central webpage. A European Rating Index (EURIX) ~~established by ESMA~~ should allow investors to easily compare all ratings that exist with regard to a specific rated entity and provide them with average ratings. In order to enable investors to compare ratings on the same entity issued by different credit rating agencies it is necessary that credit rating agencies use a harmonised rating scale, to be developed by ESMA and adopted by the Commission as a regulatory technical standard. The use of the harmonised rating scale should only be mandatory for the publication of the ratings on the EURIX webpage while credit rating agencies should be free to use their own rating scales when publishing the ratings on their own websites. The mandatory use of a harmonised rating scale should not have a harmonising effect on methodologies and processes of credit rating agencies, but should be limited to making the rating outcome comparable. It is important that the EURIX webpage shows, in addition to an aggregate rating index, all available ratings per instrument in order to allow investors to consider the whole variety of opinions before taking their own investment decision. The aggregate rating index may help investors to get a first indication of the creditworthiness of an entity. The EURIX should help smaller and new credit rating agencies to gain visibility. The European Rating Index would complement the information on h, EURIX shall create an equivalence chart between all different rating scales used by credit rating agencies. The equivalence chart may help investors to get a first indication of the creditworthiness of an entity rated by several different agencies. Historical performance data ~~to be published by~~on credit rating agencies ~~in ESMA's central repository. The European Parliament supported the establishment of such European Rating Index in its resolution on credit rating agencies of 8 June 2011~~shall be periodically published by ESMA.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 24

(24) Credit ratings, whether issued for regulatory purposes or not, have a significant impact on investment decisions. Hence, credit rating agencies have an important responsibility ~~towards investors~~ in ensuring that they comply with the rules of Regulation (EC) No 1060/2009 so that their ratings are independent, objective and of adequate quality. However, in the absence of a contractual relationship between the credit rating agency and the investor, investors are not always in a position to enforce the agency's responsibility towards them. Therefore, it is important to provide for an adequate right of redress for investors who relied on a credit rating issued in breach of the rules of Regulation (EC) No 1060/2009. The investor should be able to hold the credit rating agency liable, when acting intentionally or with gross negligence, for any damage caused by an infringement of that Regulation which had an impact on the rating outcome. Infringements which do not impact the rating outcome, such as breaches of transparency obligations, should not trigger civil liability claims.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 26

(26) It is important to provide investors with an effective right of redress against credit rating agencies. ~~As investors do not have close insight in internal procedures of credit rating agencies a partial reversal of t~~The burden of proof ~~with~~as regard tos the existence of an infringement and the infringement's impact on the rating outcome ~~seems to be appropriate if the investor has made a reasonable case in favour of the existence of such an infringement. However, the burden of proof~~, and also as regards the existence of a damage and the causality of the infringement for the damage, ~~both being closer to the sphere of the investor,~~ should fully be on the investor.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 28

(28) The fact that institutional investors including investment managers are obliged to carry out their own assessment of the creditworthiness of assets should not prevent courts from finding that an infringement of this Regulation by a credit rating agency has caused damage to an investor for which that credit rating agency is liable. While this Regulation will improve the possibilities of investors to make an own risk assessment they will continue to have more limited access to information than the credit agencies themselves. Furthermore, in particular smaller investors often will lack the capability to critically review an external rating provided by a credit rating agency.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 29

(29) In order to further mitigate conflicts of interest and facilitate fair competition in the credit rating market, it is important to ensure that the fees charged by credit rating agencies to customers are not discriminatory. Differences in fees charged for the same type of service should only be justifiable by a difference in the actual costs in providing this service to different customers. Moreover, the fees charged for rating services to a given issuer should not depend on the results or outcome of the work performed ~~or on the provision of related (ancillary) services~~. Furthermore, in order to allow for the effective supervision of those rules, credit rating agencies should disclose to ESMA the fees received from each of their clients and their general pricing policy.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 32

(32) In view of the specificities of sovereign ratings and in order to reduce the risk of volatility, it is appropriate to require credit rating agencies to only publish these ratings after the close of business of the trading venues established in the Union and at least one hour before their opening. Also, sovereign ratings should be published twice a year on predefined dates set by ESMA. Whenever special circumstances may justify a review, such credit rating review may be publish outside those predefined dates, together with a full explanatory statement on the grounds of such unplanned review. If accompanied by the explanatory statement mentioned above, such review cannot be challenged on the grounds of extemporaneity.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 34

(34) The Commission should adopt the draft regulatory technical standards developed by ESMA regarding ~~the content of the handover file when a credit rating agency is replaced by another credit rating agency,~~ the content, frequency and presentation of the information to be provided by issuers on structured finance instruments, ~~harmonisation of the standard rating scale to be used by credit rating agencies,~~ the presentation of the information, including structure, format, method and timing of reporting, that credit rating agencies, EBA and national central banks of Member States should disclose to ESMA in relation to EURIX and the content and format of the periodic reporting on fees charged by credit rating agencies for the purposes of ongoing supervision by ESMA. The Commission should adopt those standards by means of delegated acts pursuant to Article 290 of the Treaty and in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 36 a (new)

(36a) The Commission should put forward a report, and if necessary a proposal, to the European Parliament and to the Council, evaluating the possibility of the creation, within the Commission, of a European debt authority, which would be responsible to manage and coordinate all issues related with the annual debt issuance plan of the Member States, the renewal of outstanding debt and with the assessment of the sustainability of all Member States governments debt. Moreover, the European debt authority should periodically publish all data related to Member States public debt, deficit and other macroeconomic indicators on a single website. While not itself being a credit rating agency and while not itself issuing credit ratings, the European debt authority should provide investors with all relevant data regarding sovereign debt and other key macroeconomic indicators. Such disclosure on a single website should help decrease overreliance on credit ratings and enhance transparency.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 36 b (new)

(36b) The Commission should put forward, by the end of 2012, a report regarding the feasibility of a network of smaller credit rating agencies in order to increase competition in the market. Such report should evaluate the possibility of ensuring European financial support to the creation of such network - taking into consideration the potential conflict of interest arising from such public funding - and other possible non financial incentives to be put in place to this objective.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 1

Regulation (EC) No 1060/2009
Article 1 – paragraph 1

This Regulation introduces a common regulatory approach in order to enhance the integrity, transparency, responsibility, good governance and ~~reliability~~independence of credit rating activities, contributing to the quality of credit ratings issued in the Union, thereby contributing to the smooth functioning of the internal market while achieving a high level of consumer and investor protection. It lays down conditions for the issuing of credit ratings and rules on the organisation and conduct of credit rating agencies, including their shareholders and members, to promote credit rating agencies' independence, the avoidance of conflicts of interest and the enhancement of ~~consumer and~~ investor protection.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 3 – point c

Regulation (EC) No 1060/2009
Article 3 – paragraph 1 – point w

(w) “rating outlook” means an opinion regarding the likely direction of a credit rating over the ~~short and medium term~~time period specified by the relevant credit rating agency in that opinion.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 6

Regulation (EC) No 1060/2009
Article 5b – title

Reliance on credit ratings by the European Supervisory Authorities ~~and~~, the European Systemic Risk Board and the European Central Bank

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 6

Regulation (EC) No 1060/2009
Article 5b – paragraph 1

The European Supervisory Authority (European Banking Authority) established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council ~~(*)~~1 (EBA), the European Supervisory Authority (European Insurance and Occupational Pensions Authority) established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council ~~(**)~~2 (EIOPA) ~~and ESMA~~, ESMA and the ECB shall not refer to credit ratings in their guidelines, recommendations and draft technical standards where such references have the potential to trigger mechanistic reliance on credit ratings by competent authorities or financial market participants. Accordingly, and at the latest by 31 December 2013, EBA, EIOPA ~~and ESMA~~, ESMA and the ECB shall review and remove where appropriate all references to credit ratings in existing guidelines and recommendations. _____________ 1 OJ 331, 15.12.2010, p. 12. 2 OJ 331, 15.12.2010, p. 48.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 6

Article 5c Due diligence obligations and internal risk management Financial institutions and institutional investors shall perform all due diligence obligations and internal risk management obligations when acquiring financial products, especially in regard to complex or structured products. When investors disregard intentionally or with gross negligence their due diligence and their internal risk management obligations, credit rating agencies shall not be held liable for damage or loss arising from such conduct.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 7 a (new)

Regulation (EC) No 1060/2009
Article 6 – paragraph 3 a (new)

(7a) In Article 6, the following paragraph is added: "3a. A credit rating agency shall not provide consultancy or advisory services to the rated entity or a related third party regarding the corporate or legal structure, assets, liabilities or activities of that rated entity or related third party."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 7 b (new)

Regulation (EC) No 1060/2009
Article 6 – paragraph 3 b (new)

(7b) In Article 6, the following paragraph is added: "3b. Credit Rating Agencies shall establish, maintain, enforce, and document an effective internal control structure governing the implementation of policies and procedures to the prevention and control of possible conflicts of interest and to ensure the independence of ratings, analysts and rating teams regarding shareholders, administrative and management bodies and sales and marketing activities. Standard operating procedures (SOPs) shall be put in place with regard to corporate governance, organisation, and the management of conflict of interest. SOPs shall be periodically monitored and reviewed in order to evaluate their effectiveness and assess whether they should be updated."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 7 c (new)

Regulation (EC) No 1060/2009
Article 6 – paragraph 3 c (new)

(7b) In Article 6, the following paragraph is added: "3c. Credit rating agencies shall submit an annual internal controls report to ESMA, which shall contain a description of the responsibility of their management in establishing and maintaining an effective internal control structure and an assessment of the effectiveness of their internal control structure."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 8

Regulation (EC) No 1060/2009
Article 6a – paragraph 1

1. All shareholders or a members of a credit rating agency holding at least 510 % of the capital or of the voting rights in that agency shall not (a) hold 5% or more of the capital of any other credit rating agency. This prohibition does not apply to holdings in diversified collective investment schemes, including managed funds such as pension funds or life insurance, provided that the holdings in diversified collective investment schemes do not put him or her in a position to exercise significant influence on the business activities of those schemes; (b) have the right or the power to exercise 5% or more of the voting rights in any other credit rating agency; (c) have the right or the power to appoint or remove members of the administrative, management or supervisory body of any other credit rating agency; (d) be member of the administrative, management or supervisory body of any other credit rating agency; (e) have the power to exercise, or actually exercise, dominant influence or control over any other credit rating agency.should be publicly disclosed. (This amendment applies throughout the text. Adopting it will necessitate corresponding changes throughout.)

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 8

Regulation (EC) No 1060/2009
Article 6a – paragraph 2

2. ~~This Article does not apply to investmen~~Where a shareholder or a member of a credit rating agency holding at least 10% of the capital or the voting rights in otherat credit rating agenc~~ies belonging to the same group of credit rating agencies~~y is also a member of the administrative or supervisory board of the rated entity or has invested in the rated entity, that relationship shall be publicly disclosed and the credit rating agency shall disclose the fact that its rating could be affected.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 8

Regulation (EC) No 1060/2009
Article 6b

Article 6b Maximum duration of the contractual relationship with a credit rating agency 1. Where a credit rating agency has entered into a contract with an issuer or its related third party for the issuing of credit ratings on that issuer, it shall not issue credit ratings on that issuer for a period exceeding three years. 2. Where a credit rating agency has entered into a contract with an issuer or its related third party for the issuing of credit ratings on the debt instruments of that issuer, the following shall apply: (a) when those credit ratings are issued within a period exceeding an initial period of twelve months but shorter than three years, the credit rating agency shall not issue any further credit ratings on those debt instruments from the moment that ten debt instruments have been rated; (b) when at least ten credit ratings are issued within an initial period of twelve months, that credit rating agency shall not issue any further credit ratings on those debt instruments after the end of that period; (c) when less than ten credit ratings are issued, the credit rating agency shall not issue any further credit ratings on those debt instruments from the moment a period of 3 years have elapsed. 3. Where an issuer has entered into a contract regarding the same matter with more than one credit rating agency, the limitations set out in paragraphs 1 and 2 shall only apply to one of these agencies. However, none of these agencies shall have a contractual relationship with the issuer exceeding a period of six years. 4. The credit rating agency referred to in paragraphs 1 to 3 shall not enter into a contract with the issuer or its related third parties for the issuing of credit ratings on the issuer or its debt instruments for a period of four years from the end of the maximum duration period of the contractual relationship referred to in paragraphs 1 to 3. The first subparagraph shall also apply to: (a) a credit rating agency belonging to the same group of credit rating agencies as the credit rating agency referred to in paragraphs 1 and 2; (b) a credit rating agency which is a shareholder or member of the credit rating agency referred to in paragraphs 1 and 2; (c) a credit rating agency in which the credit rating agency referred to in paragraph 1 and 2 is a shareholder or member. 5. Paragraphs 1 to 4shall not apply to sovereign ratings. 6. Where following the end of the maximum duration period of the contractual relationship, pursuant to the rules in paragraphs 1 and 2, a credit rating agency is replaced by another credit rating agency, the exiting credit rating agency shall provide the incoming credit rating agency with a handover file. Such file shall include relevant information concerning the rated entity and the rated debt instruments as may reasonably be necessary to ensure the comparability with the ratings carried out by the exiting credit rating agency. The exiting rating agency shall be able to demonstrate to ESMA that such information has been provided to the incoming credit rating agency. 7. ESMA shall develop draft regulatory technical standards to specify technical requirements on the content of the handover file referred to in paragraph 5. ESMA shall submit those draft regulatory technical standards to the Commission by 1 January 2013. Power is delegated to the Commission to adopt the regulatory technical standards referred to in this paragraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010.deleted (This amendment applies throughout the text. Adopting it will necessitate corresponding changes throughout.)

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 – point c

Regulation (EC) No 1060/2009
Article 8 – paragraph 5a – subparagraph 1

5a. A credit rating agency that intends to introduce significant changes or use ~~any~~ new rating methodologies, models or key rating assumptions shall without undue delay inform ESMA and publish the proposed relevant changes or proposed new methodologies on its website inviting stakeholders to submit comments for a period not shorter than one month, together with a detailed explanation of the reasons for and the implications of the proposed changes or proposed new methodologies.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 – point c

Regulation (EC) No 1060/2009
Article 8 – paragraph 5a – subparagraph 2

After expiry of the consultation period referred to in the first subparagraph~~, the credit rating agency shall notify ESMA of the intended changes or proposed new methodologies~~ and after the approval of the changes or new methodologies, the credit rating agency shall notify them to ESMA without undue delay.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 – point d – point i

Regulation (EC) No 1060/2009
Article 8 – paragraph 6 – introductory part

6. When methodologies, models or key assumptions used in credit rating activities are changed ~~following the decision of ESMA referred to in paragraph 3 of Article 22a,~~ a credit rating agency shall without undue delay:

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 – point d – point ii

Regulation (EC) No 1060/2009
Article 8 – paragraph 6 – point aa

(aa) i~~mmediately~~nform ESMA and publish on its website the new methodologies ~~together~~ with a detailed explanation ~~thereof~~;

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 – point e

Regulation (EC) No 1060/2009
Article 8 – paragraph 7 – point a

~~(a) notify those errors to ESMA and all affected rated entities;~~deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 – point e

Regulation (EC) No 1060/2009
Article 8 – paragraph 7 – point b

~~(b) publish those errors on its website;~~deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 10 a (new)

Regulation (EC) No 1060/2009
Article 8a (new)

10a. The following Article is inserted: "Article -8a Sovereign ratings 1. Sovereign credit ratings shall be reviewed at least every six months. 2. The sovereign credit rating reviews referred to in paragraph 1 shall be published only twice a year, on predefined dates that shall be established by ESMA. 3. Credit rating agencies shall publish sovereign credit rating reviews after close of business in all trading venues established in the Union and at least one hour before their opening. 4. Where justified by particular circumstances regarding the situation of a the country concerned, sovereign credit rating reviews may be publish on dates other than those established by ESMA under paragraph 2, together with a full explanatory statement on the grounds of such unplanned review. 5. Where sovereign credit ratings are published in accordance with paragraph 4, they shall not be challenged on the ground of their extemporaneity."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 11

Regulation (EC) No 1060/2009
Article 8b – title

Double credit rating ~~of structured finance instruments~~

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 11

Regulation (EC) No 1060/2009
Article 8b – paragraph 1 a (new)

1a. All credit ratings used for regulatory purposes shall take into account the ratings issued by two credit rating agencies recognised as external credit assessment institutions (ECAIs). Each credit rating agency shall provide its own independent credit rating.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 11

Regulation (EC) No 1060/2009
Article 8b – paragraph 1 b (new)

1b. The issuer shall mandate the first ECAI whose rating will be considered for regulatory purposes. The issuer may more than one credit rating agency, but only one rating shall be used for regulatory purposes. The second credit rating taken into account for regulatory purposes shall be issued by an ECAI appointed by ESMA. ESMA shall develop regulatory technical standards regarding the selection and appointment procedures relating to ECAIs, ensuring the fairness and transparency of those procedures. ESMA shall submit those draft regulatory technical standards to the Commission by [...] Power is delegated to the Commission to adopt the regulatory technical standards referred to in the second subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 11

Regulation (EC) No 1060/2009
Article 8b – paragraph 2

2. The credit rating agencies ~~mandated by an issuer or its related third parties~~ referred in paragraphs 1 and 3 shall comply with the following conditions:

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 11

Regulation (EC) No 1060/2009
Article 8b – paragraph 2 – point e

(e) none of the members of the administrative, management or supervisory body in a credit rating agency is a member of the of the administrative, management or supervisory body of any of the other credit rating agencies;deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 12

Regulation (EC) No 1060/2009
Article 10 – paragraph 2

2. Credit rating agencies shall ensure that credit ratings and rating outlooks are presented and processed in accordance with the requirements set out in Section D of Annex I and that credit ratings which are not intended by a credit rating agency to be used for regulatory purposes are clearly and prominently identified as such.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 14

Regulation (EC) No 1060/2009
Article 11a – paragraph 1

1. Any registered and any certified credit rating agency shall, ~~when issuing~~no later than one working day following the publication of a credit rating or a rating outlook, submit to ESMA rating information, including the rating and outlook of the rated instrument, information on the type of rating, the type of rating action, and date and hour of publication~~. The rating submitted shall be based upon the harmonised rating scale referred to in point (a) of Article 21(4a).~~

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 14

Regulation (EC) No 1060/2009
Article 11a – paragraph 2

2. ESMA shall establish a European Rating Index which will ~~include all credit ratings submitted to ESMA pursuant to paragraph 1 and an aggregated rating index for any rated debt instrument. The index and individual credit ratings~~constitute an aggregated rating-implied index for any rated debt instrument, derived from all credit ratings submitted to ESMA pursuant to paragraph 1, the credit risk measurements submitted by EBA derived from the internal models of banks authorised to use such models in the Union and, where available, from credit risk measurements submitted to ESMA by the national central banks of the Member States and other European and global public authorities. The index shall be published on ESMA's website.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 17

Regulation (EC) No 1060/2009
Article 19 – paragraph 1

1. ESMA shall charge fees to the credit rating agencies which are registered in accordance with this Regulation and the regulation on fees referred to in paragraph 2. Those fees shall be referable only to, but shall fully cover, ESMA's necessary and reasonable expenditure relating to the registration, certification and supervision of credit rating agencies and the reimbursement of any costs that the competent authorities may incur carrying out work pursuant to this Regulation insofar as that work relates to the supervision of credit rating agencies, in particular as a result of any delegation of tasks in accordance with Article 30.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 18 – point b

Regulation (EC) No 1060/2009
Article 21 – paragraph 4 – point a

(a) a harmonised standard rating scale to be used, in accordance with Article 11a, by registered and certified credit rating agencies, which will be based upon the metric to measure credit risk and the number of rating categories and cut off values for each rating categoryn equivalence chart between the rating scales used by registered and certified credit rating agencies;

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 18 – point b

Regulation (EC) No 1060/2009
Article 21 – paragraph 4 – point b

(b) the content and the presentation of the information, including structure, format, method and timing of reporting that credit rating agencies shall disclose to ESMA in accordance with Article 11a (1) and the information that EBA and the national central banks shall disclose to ESMA in accordance with Article 11a(2); and

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 19 – point a

Regulation (EC) No 1060/2009
Article 22a – title

Examination of ~~rating methodologies~~compliance with the back- testing obligation

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 19 – point b

Regulation (EC) No 1060/2009
Article 22a – paragraph 3

(b) the following paragraph 3 is added: ‘3. ESMA shall also verify that any intended changes to rating methodologies notified by a credit rating agency in accordance with Article 8(5a) comply with the criteria laid down in Article 8(3) as specified in the regulatory technical standard referred to in point (d) of Article 21(4). The credit rating agency may only apply the new rating methodology after ESMA has confirmed the methodology's compliance with Article 8(3). [ESMA shall be able to exercise the powers referred to in the first subparagraph from the date of entry into force of the regulatory technical standard referred to in point (d) of Article 21(4) of Regulation (EC) No 1060/2009.] Where the regulatory technical standard referred to in point (d) of Article 21(4) is not in force, ESMA shall not be able to exercise the power referred to in the first subparagraph.’deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 20

Regulation (EC) No 1060/2009
Article 35a – paragraph 4

4. Where an investor establishes facts from which it may be inferred that a credit rating agency has committed any of the infringements listed in Annex III, ~~it will be for~~such an investor will have to produce proof that the credit rating agency ~~to prove that it has not~~has committed thate infringement ~~or that that infringement did not have an~~intentionally or with gross negligence and that such infringement has had a significant impact on the issued credit rating.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 20

Regulation (EC) No 1060/2009
Article 35a – paragraph 5 a (new)

5a. The right of redress set out in this Article shall not prevent ESMA from fully performing its powers laid down in Article 36a.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 20

Regulation (EC) No 1060/2009
Article 35a – paragraph 5 b (new)

5b. This Article shall not apply where the investor, intentionally or with gross negligence, does not comply with its due diligence and internal management obligations as laid down in Article 5c.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 21 – point b b (new)

Regulation (EC) No 1060/2009
Article 36a – paragraph 4 a (new)

(bb) In Article 36a, the following paragraph is added: "4a. The basic amounts of fines defined within the limits set out in paragraph 2 shall be adjusted, where appropriate, by taking into account any damages paid or to be paid following a civil liability action pursuant Article 35a."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 24 – point a

Regulation (EC) No 1060/2009
Article 39 – paragraph 1

~~By 7 December~~1. By July 20123, the Commission shall make an assessment of the application of this Regulation, including an assessment of the reliance on credit ratings in the Union, the impact on the level of concentration in the credit rating market, the cost and benefits of impacts of the Regulation ~~and of~~, the appropriateness of the remuneration of the credit rating agency by the rated entity (issuer-pays model), and whether conflicts of interest in the credit rating market are appropriately mitigated, in particular whether the measures adopted under this Regulation fulfil the objectives of enhancing ratings quality or whether additional measures are necessary. The Commission shall submit a report thereon to the European Parliament and the Council.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 24 – point b

Regulation (EC) No 1060/2009
Article 39 – paragraph 4

4. By 1 July 2015, the Commission shall assess the situation in the credit rating market, in particular the availability of sufficient choice in order to comply with the requirements set out in Article~~s 6b and~~ 8b. The review shall also assess the need to extend the scope of the obligations in Article 8a ~~to include other financial products, including covered bonds~~.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 24 a (new)

Regulation (EC) No 1060/2009
Article 40a a (new)

(24 a) The following article is inserted: "Article 40aa European debt authority By ...*, in order to reduce overreliance on credit ratings, the Commission shall put forward a report, and if appropriate a proposal, to the European Parliament and to the Council, evaluating the possibility of the creation, within the Commission, of a European debt authority that would be responsible to manage and coordinate all issues related with the annual debt issuance plan of the Member States, the renewal of their outstanding debt and the assessment of the sustainability of all Member States governments debt, as well as a annual publication of data related to Member States public debt, deficit and other macroeconomic indicators. The European debt authority shall provide investors with all relevant data regarding sovereign debt and other key macroeconomic indicators published on a single website."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 24 b (new)

Regulation (EC) No 1060/2009
Article 40a b (new)

(24b) The following article is inserted: "Article 40ab Credit rating agency network The Commission shall put forward, by the end of 2012, a report regarding the feasibility of a network of smaller credit rating agencies in order to increase competition in the market. That report shall evaluate the possibility of ensuring European financial support to the creation of such network, taking into consideration the potential conflict of interest arising from such public funding, and other possible non-financial incentives to be put in place to this objective."

2012/04/17
Committee: ECON

Proposal for a regulation
Article 2 – paragraph 3

Point (8) of Article 1 of this Regulation in relation to Article 6a(1)(a) of Regulation (EC) No Regulation (EC) No 1060/2009 shall apply from [1 year after the entry into force of this Regulation] as regards any shareholder or member of a credit rating agency which on 15 November 2011 held 510% or more of the capital of more than one credit rating agency.

2012/04/17
Committee: ECON

Proposal for a regulation
Annex I – point 1 – point b

Regulation (EC) No 1060/2009
Annex I – Section B – point 3

(b) point 3 is amended as follows: (i) the introductory sentence of the first subparagraph is replaced by the following: '3. A credit rating agency shall not issue a credit rating or a rating outlook in any of the following circumstances, or shall, in the case of an existing credit rating or rating outlook, immediately disclose where the credit rating or rating outlook is potentially affected by the following:' (ii) the following point (aa) is inserted after point (a): '(aa) a shareholder or member of a credit rating agency holding, directly or indirectly, 10% or more of either the capital or the voting rights of that credit rating agency or being otherwise in a position to exercise significant influence on the business activities of the credit rating agency, directly or indirectly owns financial instruments of the rated entity or a related third party or has any other direct or indirect ownership interest in that entity or party, other than holdings in diversified collective investment schemes, including managed funds such as pension funds or life insurance, which do not put him in a position to exercise significant influence on the business activities of the scheme;'; (iii) the following point (ba) is inserted after point (b): '(ba) the credit rating is issued with respect to a rated entity or a related third party which directly or indirectly holds 10% or more of either the capital or the voting rights of that credit rating agency;'; (iv) the following point (ca) is inserted after point (c): '(ca) a shareholder or member of a credit rating agency holding, directly or indirectly, 10% or more of either the capital or the voting rights of that credit rating agency or being otherwise in a position to exercise significant influence on the business activities of the credit rating agency, is a member of the administrative or supervisory board of the rated entity or a related third party;'; (v) the second subparagraph is replaced by the following: 'A credit rating agency shall also immediately assess whether there are grounds for re-rating or withdrawing the existing credit rating or credit outlook.'deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 1 – point b

Regulation (EC) No 1060/2009
Annex III – Part I – points 26a to 26 f

(b) the following new points 26a to 26f are inserted: '26a. The credit rating agency which entered into a contract with an issuer or its related third party for the issuing of credit ratings on the issuer infringes Article 6b(1) by issuing credit ratings on this issuer for a period exceeding three years. 26b. The credit rating agency which entered into a contract with an issuer or its related third party for the issuing of credit ratings on the debt instruments of the issuer infringes Article 6b(2) by issuing credit ratings on at least ten debt instruments of the same issuer during a period exceeding 12 months or by issuing credit ratings on the debt instruments of the issuer for a period exceeding 3 years. 26c. The credit rating agency which entered into a contract with an issuer alongside at least one more credit rating agency infringes Article 6b(3) by having a contractual relationship with the issuer for a period exceeding six years. 26d. The credit rating agency which entered into a contract with an issuer or its related third party for the issuing of credit ratings on the issuer or its debt instruments of the issuer infringes Article 6b(4) by not respecting the prohibition to issue credit ratings on the issuer or its debt instruments for a period of four years from the end of the maximum duration period of the contractual relationship referred to in paragraphs1 to 3 of Article 6b. 26e. The credit rating agency which entered into a contract with an issuer or its related third party for the issuing of credit ratings on the issuer or its debt instruments of the issuer infringes Article 6b(6) by not making available at the end of the maximum duration period of the contractual relationship with the issuer or its related third party a handover file with the required information to an incoming credit rating agency contracted by the issuer or its related third party to issue credit ratings on this issuer or its debt instruments.'deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 1 – point h

Regulation (EC) No 1060/2009
Annex III – Part I – point 46a

46a. The credit rating agency infringes ~~the second subparagraph of Article 8(5) in conjunction with the first sentence of the first subparagraph of Article 8(5)~~Article 10a by not monitoring its sovereign ratings or by not reviewing its sovereign ratings on an ongoing basis and at least every 6 months.

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 2 – point a

Regulation (EC) No 1060/2009
Annex III – Part II – point 3a and 3b

(a) the following points 3a and 3b are inserted: ‘3a. The credit rating agency infringes the second subparagraph of Article 8(5a) by not notifying ESMA of the intended changes to the rating methodologies, models or key assumptions or of the proposed new methodologies, models or key assumptions. 3b. The credit rating agency infringes point (a) of Article 8(7) by not notifying ESMA of discovered errors in its methodologies or in their application.’deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 3 – point a

Regulation (EC) No 1060/2009
Annex III – Part III – point 3a

3a. The credit rating agency infringes the first subparagraph of Article 8(5a) by not notifying ESMA and publishing on its website the proposed relevant changes to the methodologies, models or key rating assumptions or the proposed new methodologies, models or key rating assumptions together with a detailed explanation of the reasons for and the implications of the proposed changes.

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 3 – point b

Regulation (EC) No 1060/2009
Annex III – Part III – point 4a

4a. The credit rating agency infringes point (aa) of Article 8(6), where it intends to use new methodologies, by not ~~publishing immediately~~notifying ESMA and publishing on its website the new methodologies together with a detailed explanation ~~thereof~~without undue delay.

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 3 – point b

Regulation (EC) No 1060/2009
Annex III – Part III – point 4b

~~4b. The credit rating agency infringes point (a) of Article 8(7) by not notifying affected rated entities of discovered errors in its methodologies or in their application.~~deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Annex III – point 3 – point b

Regulation (EC) No 1060/2009
Annex III – Part III – point 4c

~~4c. The credit rating agency infringes point (b) of Article 8(7) by not publishing on its website discovered errors in its methodologies or in their application.’~~deleted

2012/04/17
Committee: ECON