Bloomberg News

Credit-Rating Firms to Be Supervised by EU Markets Regulator

November 01, 2011

(Updates with Moody’s comment in seventh paragraph)

Oct. 31 (Bloomberg) -- The three main credit-ratings companies face direct supervision from a single European Union market regulator for the first time, after registering with the European Securities and Markets Authority.

Moody’s Investors Service, Standard & Poor’s and Fitch Ratings could face on-site inspections from ESMA to assess how well they comply with rules on “governance, conflicts of interest and transparency,” the agency said in an e-mailed statement.

“By supervising these entities, ESMA will contribute to the quality of ratings which is crucial” for protecting investors and keeping financial markets functioning well, Steven Maijoor, ESMA chairman, said in an e-mailed statement today.

The European Commission, the EU’s executive arm, proposed that credit-ratings companies should be directly regulated by ESMA in May last year. Scrutiny of the firms, which analyze debt-default risk, intensified after Greece’s rating was cut to junk status by Standard & Poor’s in 2010.

“Our registration reflects the robust standards, policies and processes that S&P has put in place worldwide,” Martin Winn, a spokesman for S&P, said in an e-mailed comment.

ESMA also gave non-EU rating companies that issue reports on corporate and sovereign debt in Europe a three month extension, until Jan. 31, to a deadline requiring them to comply with the rules.

“Moody’s welcomes the conclusion of the registration process,” Frederic Drevon, Moody’s Investors Service’s Europe chief, said in an e-mailed statement.

--Editors: Christopher Scinta, Anthony Aarons

To contact the reporters on this story: Ben Moshinsky in London at bmoshinsky@bloomberg.net;

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net


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