ESMA clarifies endorsement regime for third-country credit ratings

On 17 November 2017, the European Securities and Markets Authority (ESMA) published its Final Report updating its Guidelines on the application of the endorsement regime under the CRA (Credit Rating Agencies) Regulation. The entry into force of the 2013 amendments to the CRA Regulation (CRA 3), and the associated introduction of new requirements to endorsed ratings in 2018, provided an opportunity for ESMA to review the regime more broadly.

The Final Report details a number of changes and clarifications to the existing Guidelines focusing on the obligations of the endorsing CRA, the conduct of the third-country CRA, and the third-country legal and supervisory framework. It also clarifies ESMA’s supervisory powers over endorsed credit ratings and the notion of objective reasons.