EU Commission's proposal on the revision of the directives (12 November 2008)
The proposal lays down conditions for the issuance of credit ratings which are needed to restore market confidence and increase investor protection. It introduces a registration procedure for credit rating agencies to enable European supervisors to control the activities of rating agencies whose ratings are used by credit institutions, investment firms, insurance, assurance and reinsurance undertakings, collective investment schemes and pension funds within the Community.
New rules include the following:
• Credit rating agencies may not provide advisory services.
• They will not be allowed to rate financial instruments if they do not have sufficient quality information to base their ratings on
• They must disclose the models, methodologies and key assumptions on which they base their ratings
• They will be obliged to publish an annual transparency report
• They will have to create an internal function to review the quality of their ratings
• They should have at least three independent directors on their boards whose remuneration cannot depend on the business performance of the rating agency.
• More on EU single market >>
• Text of the proposal >>
• European Parliament adopted the proposal on 24 April >>