BETA

39 Amendments of Olle SCHMIDT related to 2011/0361(COD)

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 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 of credit ratings issued under the issuer-pays model.deleted

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 8

(8) Regular rotation of credit rating agencies issuing credit ratings on an issuer or its debt instruments should 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 short period of time. In those cases, the maximum duration of the business relationship should be shorter 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 rating 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 years.deleted

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 issuers. In a market context where the rotation 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 market.deleted

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 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 17

(17) The new rules limiting the duration of the business relationship between an issuer and the credit rating agency would 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 regularly need to appoint one or more new credit rating agencies and disturbing the smooth functioning of the new rules. More importantly, further consolidation driven by large established credit rating agencies would particularly prevent the emergence of more diversity in the market.deleted

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 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 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 of new rating methodologies. 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.

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 25

(25) Credit rating agencies should only be held liable if ESMA deems that they infringed intentionally or with gross negligence any obligations imposed on them by Regulation (EC) No 1060/2009. Thise standard of fault ~~means that credit rating agencies should not face liability claims if they neglect individual obligations under the Regulation without disregarding their duties in a serious way~~required to be proven by an investor is that of intention of major negligence. This standard of fault is appropriate because the activity of credit rating involves a certain degree of assessment of complex economic factors and the application of different methodologies may lead to different rating results, non of which can be qualified as incorrect.

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 the burden of proof with regard to 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 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.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Recital 27

(27) Regarding matters concerning the civil liability of a credit rating agency ~~and which are not covered by this regulation~~, such matters should be governed by the applicable national law determined by the relevant rules of International Private Law. The competent court to decide on a claim for civil liability brought by an investor should be determined by the relevant rules on International Jurisdiction.

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 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 central banks of the Members 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
Article 1 – point 6

Regulation (EC) No 1060/2009
Article 5a

Credit institutions, investment firms, insurance and reinsurance undertakings, institutions for occupational retirement provisions, management and investment companies, alternative investment fund managers and central counterparties as defined in Regulation (EU) No xx/201x of the European Parliament and of the Council of xx xxx 201x on OTC derivatives, central counterparties and trade repositories shall make their own credit risk assessment and shall not solely or mechanistically rely on credit ratings for assessing the creditworthiness of an entity or financial instrument. Competent authorities in charge of supervising these undertakings shall ~~closely check~~, taking into account the nature, scale and complexity of those undertakings' activities, monitor the adequacy of undertakings credit assessment processes.

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 change or use any new rating methodologies~~, models or key rating assumptions shall publish the proposed changes or proposed new~~ shall inform ESMA and publish relevant information about changes to the 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 d – point i

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

(i) the introductory sentence is replaced by the following: 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:’deleted

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) immediately inform ESMA and publish on its website information about the new methodologies ~~together with a detailed explanation thereof~~;

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 14

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

European Rating ~~Index~~Data Platform

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 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~~Data Platform 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~~. The individual credit ratings shall be published on ESMA's website and easily be downloaded as a data feed.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 14

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

2a. This Article shall not apply to ratings or rating outlooks which are exclusively disclosed on a subscription or paying basis to investors.

2012/04/17
Committee: ECON

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

Regulation (EC) No 1060/2009
Article 21 – paragraph 5

(c) a new subparagraph is added to paragraph 5: ‘That report shall also assess the market concentration levels, the risks arising from high concentration, and the impact on the overall stability of the financial sector.’deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 19

Regulation (EC) No 1060/2009
Article 22a

(19) Article 22a is amended as follows: (a) the title of the Article is replaced by the following: ‘Examination of rating methodologies’ (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 1

1. Where a credit rating agency has been deemed by ESMA's Board of Supervisors to have committed, intentionally or with gross negligence, any of the infringements listed in Annex III in accordance with Article 24 (2)(d) having an impact on a credit rating on which an investor has relied when purchasing a rated instrument, such an investor may bring an action against that credit rating agency for any damage caused to that investor as a direct result of that infringement.

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 20

Regulation (EC) No 1060/2009
Article 35a – paragraph 2

2. An infringement shall be considered to have an impact on a credit rating if the credit rating that has been issued by the credit rating agency is different from the rating that would have been issued had the credit rating agency not committed that infringement.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 20

Regulation (EC) No 1060/2009
Article 35a – paragraph 3

~~3. A credit rating agency acts with gross negligence if it seriously neglects duties imposed upon it by this Regulation.~~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 the credit rating agency to prove that it has not committed that infringement or that that infringement did not have an impact on the issued credit rating.deleted

2012/04/17
Committee: ECON

Proposal for a regulation
Article 1 – point 20

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

5. The civil liability referred to in paragraph 1 shall not be excluded or limited in advance by agreement. Any clause in such agreements excluding or limiting the civil liability in advance shall be deemed null and void.’deleted

2012/04/17
Committee: ECON

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

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

1. By 731 December 20125, 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 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~~ 8b.

2012/04/17
Committee: ECON

Proposal for a regulation
Annex I – point 2 – point d

Regulation (EC) No 1060/2009/EC
Annex I – Section C – point 8

(d) point 8 is replaced by the following: ‘8. For the purposes of Article 7(4): (a) credit rating agencies shall ensure that the lead rating analysts shall not be involved in credit rating activities related to the same rated entity or its related third parties for a period exceeding four years; (b) credit rating agencies others than those mandated by an issuer or its related third party and all credit rating agencies issuing sovereign ratings shall ensure that: (i) the rating analysts shall not be involved in credit rating activities related to the same rated entity or its related third parties for a period exceeding five years; (ii) the persons approving credit ratings shall not be involved in credit rating activities related to the same rated entity or its related third parties for a period exceeding seven years. The persons referred to points (a) and (b) of the first subparagraph shall not be involved in credit rating activities related to the rated entity or related third parties referred to in those points within two years of end of the periods set out in those points.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 2 – point a

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

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.deleted

2012/04/17
Committee: ECON

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

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

3a. The credit rating agency infringes the first subparagraph of Article 8(5a) by not informing ESMA or not publishing on its website the proposed ~~changes to the methodologies, models or key rating assumption~~new methodologies or changes orf the ~~proposed new methodologies, models or key rating assumption~~methodologies 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 informing ESMA or publishing immediately on its website the new methodologies ~~together with a detailed explanation thereof~~.

2012/04/17
Committee: ECON