CESR’s Technical Advice to the European Commission on Possible Measures Concerning Credit Ratings Agencies - ACT / AFTE Response

The ACT and AFTE believe that CESR is right to acknowledge the importance of the IOSCO Code of Fundamentals. They do however believe that a limited number of amendments will eventually be necessary to address fully some of their concerns.

• We believe that the IOSCO code should be allowed to bed in for a couple of
  years before any additional provisions by way of registration requirements or
  regulation are introduced.
• If, in the event, any form of registration or compliance filing is considered necessary for a CRA, we believe that a single such registration or filing should meet all compliance obligations throughout the EU for any legal entity.
• We consider the market to be the best regulator of CRAs, and that this can be assisted by the adoption by the industry of a suitable code of conduct.

In general, the ACT and AFTE believe that the market is the best regulator of credit rating agencies (CRAs) and that the market can be helped in that by adoption by participants in the industry of a suitable code of practice. Given the recent publication of the IOSCO Code Fundamentals, the ACT and AFTE believe that a couple of years should be allowed to see how that works in practice before any consideration of regulation is made.

However, the ACT and AFTE with other issuer organisations will urge additions to code of practice by agencies on a voluntary basis and may suggest a limited number of amendments to the existing IOSCO code.

All responses to the CP questions below should be read in this context.