DBRS Comments on ESMA's Guidelines on the Application of the Endorsement Regime for Rating Agencies

DBRS has commented on the European Securities and Markets Authority (ESMA) consultation paper on the application of the endorsement regime (the Consultation Paper – ESMA Guidelines) under Article 4 (3) of the Credit Rating Regulation 1060/2009 (CRA Regulation).

The CRA Regulation is in the process of being modified to reflect ESMA as being fully responsible for the supervision of credit rating agencies (CRAs) in Europe (the Revised CRA Regulation). In line with the Revised CRA Regulation, the guidance on the endorsement regime must be updated and issued by ESMA by June 7, 2011.

The Consultation Paper – ESMA Guidelines seeks to clarify the endorsement regime and update the endorsement guidelines. ESMA currently interprets that "as stringent as" CRA requirements must be established by law or regulation in a third country by June 7, 2011, in order for the use of endorsement. ESMA does not currently support the interpretation that a third-country CRA would be permitted to follow "as stringent as" standards through its own policies and procedures. DBRS does not support ESMA’s interpretation that it cannot supervise EU-registered CRAs that use endorsement without an equivalent third-country regulatory regime in place.

The DBRS response to the Consultation Paper - ESMA Guidelines is available under Regulatory Affairs at www.dbrs.com.

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