Tuesday, February 12, 2013

Stricter European Rules and Fines For Rating Agencies

On 16 January 2013, the European Parliament agreed to the introduction of stricter rules for rating agencies. The new rules are aimed at addressing a number of problems including over-reliance on ratings by financial market participants and conflicts of interests caused by 'the issuer pays' remuneration model .

As part of the more stringent regime, unsolicited ratings of government debt may not be published more frequently than three times a year. In addition, agencies may only issue their ratings after close of business or at least one hour before the start of trading on European exchanges. Rating agencies may not publish ratings of their major shareholders.