Credit rating agencies have reason to swing by the European Securities and Markets Authority’s (ESMA) website as the body has just provided some extra insights into how they are regulated.
ESMA has announced that it has updated its Questions and Answers (Q&As) on the Credit Rating Agencies Regulation (CRAR).
As the name suggests, the law is set up to ensure those agencies behave in a decent matter. The regulation, just like the General Data Protection Regulation (GDPR), the Markets in Financial Instruments Directive (MiFID II) and the Revised Payment Services Directive (PSD2), was set up to in the aftermath of the financial crisis.
The updated Q&A provides clarification on what steps should a CRA take in order to ensure a sufficient level of quality and transparency in the periodic review of credit ratings conducted in accordance with Article 8(5) of CRAR.
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