The international agency Fitch Ratings announced, on 27 August, that it had filed an application for registration with the European Commission in order to conform to new rules enacted at EU level for the regulation of the sector, which has been criticised for its role in the financial crisis.

In September 2009, a regulation was adopted – to be directly applied in member states – aimed at controlling the activity of rating agencies, as well as the risks associated with certain financial products. This registration obliges them to conform to a number of measures, in particular with regard to their internal operation, which aims to avoid conflicts of interest and impose greater transparency.

The three global agencies (Moody’s Investors Service, Standard & Poor’s and Fitch), described as excessively powerful and uncontrollable, have been a target for several member states since the beginning of the financial crisis. Investors generally rely on their ratings to take decisions, and they are now accused of having turned a blind eye to the toxic ‘subprime’ products at the origin of the crisis. At the beginning of this year, they were also criticised for having prompted panic by downgrading the ratings of European countries, including Greece, Spain and Portugal.

COMMON REGULATORY SCHEME

To recall, Regulation 1060/2009, which came into effect in December 2010, introduces a common regulatory scheme for the issuance of ratings. All rating agencies that would like their ratings to be used in the EU must apply for registration. The initial text provides that applications must be submitted to the Committee of European Securities Regulators (CESR) and must be the subject of a collegiate decision by the regulators concerned. Registered rating agencies must adhere to strict rules in order to guarantee that the ratings are not influenced by conflicts of interest; that the rating agencies remain vigilant as to the quality of the rating method and the ratings themselves; and that they take effect in a transparent manner. The regulation also anticipates an effective monitoring system under which the competent European authorities will monitor the agencies.

The Commission subsequently proposed, on 2 June this year, an amendment to this regulation anticipating that credit rating agencies wishing to practice in one of the EU member states must register with the future new monitoring authority – the European Securities and Markets Authority (ESMA). The latter will have the power to impose fines or even withdraw the licences of any organisation violating the rules. It will also be able to carry out inspections on the premises and request information on the way in which evaluations are gathered.

The agencies have until 7 September to file a registration request.