European securities regulators announced that the big four credit rating agencies have been met its requirements and are now registered to do business in the region.

The European Securities and Markets Authority announced Monday the registrations of DBRS, Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s as credit rating agencies in the European Union. The ESMA says that the registrations of the big four follows a co-ordinated examinations by the national authorities of the EU, which covered, among other things, issues such as the CRAs’ independence, governance and transparency.

“In bringing these globally active credit rating agencies under the umbrella of European supervision today, Europe is taking a major step towards a sounder credit rating market with increased transparency and reliability,” said Steven Maijoor, ESMA chair.

“By supervising these entities, ESMA will contribute to the quality of ratings which is crucial for the well-functioning of financial markets and investor protection. Their registration allows ESMA to commence on-site inspections and to assess how CRAs meet the requirements in areas such as governance, conflicts of interest and transparency,” he added.

The ESMA also said that it is still assessing the regulatory frameworks of other countries to allow for the use of credit ratings that are issued outside the EU. So far, only the regulatory framework for CRAs in Japan has been recognised to be in line with the requirements of the European regulations. Given the ongoing recognition process, the ESMA has granted a transition period until January 31, 2012 (which will likely be extended until April 30, 2012), to allow market participants to continue using credit ratings issued elsewhere.