European securities regulators have endorsed Australia’s regulatory regime for credit rating agencies, and say they will making a decision on Canada, among other countries, next.
The European Securities and Markets Authority announced Thursday that it has decided to endorse Australia’s regime for overseeing credit ratings. This follows its earlier endorsement of Japan’s regime. As part of the decision, the ESMA and the Australian Securities and Investments Commission established a co-operation arrangement for the supervision of cross-border CRAs.
The ESMA reports that it is also in an advanced state of its assessment for several other non-EU countries, including Canada, Argentina, Hong Kong, Singapore, and the U.S. It is also currently examining the regulatory frameworks of Brazil and Mexico.
Regulators have also extended the initial transitional period of three months for credit ratings issued outside the European Union until April 30, 2012. This decision allows the use of credit ratings issued in third countries while the convergence process with the EU requirements and the assessment of third countries continues.
The ESMA notes that it is conscious of the fact that there could be significant market impact if it hasn’t made a decision on whether to endorse the regimes of the various countries under consideration before the April 2012 deadline, so it’s working to finalize the assessments and conclude relevant cooperation agreements in the first quarter of 2012.
While it expects to endorse the regimes of most of the countries under consideration, ESMA says it cannot guarantee that it will be able to endorse all of them by the end of April.
Additionally, the ESMA has adopted its first four draft regulatory technical standards on credit rating agencies, which aim to harmonize standards to ensure a level playing field and adequate protection for investors and consumers across the European Union.