European Commission consultation on Credit rating agencies - ACT Response
The Association of Corporate Treasurers
The European Commission has been consulting on regulatory arrangements for credit rating agencies ("CRAs").
The ACT submission notes the functions the CRAs perform for issuers and investors. Specifically, the submission:
- Agrees that excessive "hard coding" of ratings within regulation can cause a herding effect that may be destabilizing, but sees the alternative of using CDS or bond spreads as inappropriate in regulation;
- Sees no need to change the charging model for sovereign ratings, nor force free disclosure of full sovereign rating reports;
- Views special central bank rating bodies as anti-competitive, especially if their ratings are mandated in regulation;
- Believes civil liability would create a major barrier to new competition in the industry;
- Believes that the current "issuer pays" model does not cause a conflict of interests
Date
January 1, 2011