McCreevy backs calls for agencies to register in Europe
Europe’s leading financial markets regulator, itself one of the fiercest critics of the ratings industry, has backed calls by the French government to have agencies register to operate in the European Union, effectively bringing them under formal regulatory oversight.
The European Commission has welcomed a proposal last week from Christine Lagarde, the French economy minster, that EU finance ministers should discuss the idea agencies register, much the same they do in the US. Charlie McCreevy, the European Internal Market Commissioner, who was attending a meeting of EU finance minsters, told Reuters today he supported Lagarde’s views, that status-quo as it is not an option and that he has fairly strong views about some changes that may be necessary to force through in the industry.
He added: "I am not disregarding any suggestions.”
McCreevy’s proposals for change in the industry, which may need approval from EU member states and the European Parliament depending on whether his office enforces regulatory oversight or maintains self-regulation are expected to be published in August.
The commissioner's comments come just days after he warned recommendations to improve the oversight of the rating industry by the Committee of European Securities Regulators, which advises the European Commission, were weak and new laws may be required.
CESR said last week that a new oversight body for the ratings industry should be created and that the agencies themselves need to tighten-up and enhance the transparency behind the methodology they use to rate structured finance products, especially. However, a spokesman for McCreevy said: “He is not too content with the advice received from CESR. He did not think the CESR report is going to solve an awful lot. As far as credit rating agencies are concerned, something has to be changed."
Lagarde’s comments last week on finance ministers potentially discussing whether rating agencies should have to register came ahead of France taking over the EU presidency in July. Registration has been mooted before, but has received little support.
Michel Prada, France’s leading financial watchdog and chairman of the International Organisation of Securities Commissions’ technical committee has said he believed it relevant to organise some kind of registration in Europe, but that it is “not an easy task.”
He said: “Legally it's easier at national level. Registration would strengthen the capacity of regulators to monitor the way agencies do their work. It would clarify the relationship between regulators and agencies as today it is quite ambiguous.”
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