1 Amendments of Gianni PITTELLA related to 2011/0360(COD)
Amendment 5 #
Proposal for a directive
Recital 2
Recital 2
(2) An effect of the financial crisis has been that investors, including UCITS and AIFs, rely excessively on credit ratings to carry out their investments on debt instruments, without necessarily conducting their own assessments of the creditworthiness of issuers of such debt instruments. In order to improve the quality of the investments made by UCITS and AIFs and, therefore, to protect investors in those funds, it is appropriate to require the persons managing UCITS and AIFs to avoid relying exclusively and automatically on external credit ratings when assessing the risk involved in the investments made by the UCITS and AIFs they manage. The general principle on the avoidance of excessive reliance on external credit ratings should therefore be integrated into the risk management processes and systems of the managers of UCITS and AIFs, and adapted to their specificities. However, internal models for risk assessment have not proven to be a more reliable option and a mere shift from external ratings to internal evaluations is unlikely to be beneficial. In the medium term, further initiatives should be evaluated in order to take ratings out of financial regulation and eliminate risk- weighting of assets through external rating or internal models".