A 2009 regulation provides for \u00a0monitoring of credit rating agencies.\u00a0 Credit rating agencies must be registered in order for their work to be used for regulatory purposes within the EU. \u00a0They must submit their application to the Committee of European Securities Regulators.\u00a0 They must submit details of their policies and procedures and methods of managing conflicts of interest.<\/p>\n
The CESR sends the application to the regulator in the home state which deals with registration.\u00a0 The CESR seeks to ensure consistent application of the regulation. Registration may be withdrawn.\u00a0 There are powers for supervision and investigation.<\/p>\n
The European Securities and Markets Authority is responsible for registering credit agencies and has exclusive supervisory powers.<\/p>\n
Financial institutions and investors are required to carry out their own evaluation of credit risks and must not rely solely or automatically on external ratings in order to evaluate the creditworthiness of an entity or financial instrument.<\/p>\n
Credit agencies must establish a schedule indicating dates on which they will rate countries.\u00a0 They are to be rated at least every six months.<\/p>\n
In order to avoid market disruption, ratings may only be published once stock exchanges have closed and at least one hour before they are reopen.<\/p>\n
Investors in EU States must be informed of the facts and assumptions behind each rating.<\/p>\n
Each credit rating agency may be held liable if it infringes the regulation, either intentionally or through gross negligence, causing damage to an investor or an issuer.<\/p>\n
A rotation rule requires issuers of complex structured financial instruments change agency every four years.\u00a0 \u00a0Credit rating agencies must disclose situations where the shareholder holds 5% or more of the agency\\’s capital or voting rights or 5% or more of an entity rated by the agency.\u00a0 If both holdings reach or exceed 10%, the credit rating agency is not entitled to rate the entity.<\/p>\n
It is forbidden to hold 5% or more of the capital or voting rights of more than one credit rating agency, unless the agencies belong to the same group<\/p>\n\n
\n <\/div>\n","protected":false},"excerpt":{"rendered":"
Financial Collateral A Directive on financial collateral seeks to reduce credit risk in collateral financial transactions between financial institutions.\u00a0 The purpose is to provide for the rapid and informal enforcement of financial collateral.\u00a0 States may not make the creation, protection,\u00a0 enforceability or admissibility of financial collateral arrangement dependent on the performance of any formal act. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[128,168],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12210"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=12210"}],"version-history":[{"count":2,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12210\/revisions"}],"predecessor-version":[{"id":18684,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/12210\/revisions\/18684"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=12210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=12210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=12210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}