Credit rating agencies

The regulatory regime for credit rating agencies (CRAs) was overhauled in late 2009 by the adoption of Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies ('the Regulation'). Whereas CRAs and other providers of credit ratings had previously been a weakly regulated sector, the Regulation made them an integral part of the regulatory packages adopted in response to the 2007-2008 financial crisis, which included proposals for the Solvency II Directive, the Capital Requirements Directive, as well as for accounting, deposit guarantee schemes and many other areas. The aim of the new rules has been to enhance the quality of credit ratings and ensure that these ratings are not affected by conflicts of interest directly related to the credit rating process.

The Regulation lay down conditions for the issuing of credit ratings in order to restore market confidence and increase investor protection. It also introduced registration procedures for CRAs, conducted initially by the national competent authorities and later, exclusively, by the European Securities and Markets Authority (ESMA). ESMA is now the single supervisor of CRAs within the European Union, except as provided for in Article 25a of the Regulation, which makes national competent authorities (NCAs) responsible for the supervision of certain provisions on the use of credit ratings (the NCA in Slovakia is Národná banka Slovenska).

In regard to the checking of compliance with the Regulation, NBS highlights the fact that an issuer or a related third party intending to appoint at least two CRAs for the credit rating of the same issuance or entity is required by Article 8d of the Regulation to consider appointing at least one CRA with no more than 10% of the total market share, which can be evaluated by the issuer or a related third party as capable of rating the relevant issuance or entity, provided that, based on the list published on ESMA's website, there is such a CRA available for rating the specific issuance or entity. Where the issuer or a related third party does not appoint at least one CRA with no more than 10% of the total market share, NBS is required to document the fact.

NBS also highlights the fact:
that an issuer intending to solicit a credit rating of a securitisation instrument is required by Article 8c of the Regulation to appoint at least two CRAs to provide credit ratings independently of each other. Under Article 25a of the Regulation, the responsibility for supervising compliance with these obligations lies with the NCAs (NBS in Slovakia).