European securities regulators have unveiled a free, public database of credit ratings, in an effort to improve ratings transparency and investor protection.
The European Securities Markets Authority Thursday launched a Central Rating Repository, which provides information on credit ratings issued by the 15 rating agencies that are registered in the European Union. The database will allow investors to assess the performance and reliability of credit ratings on different types of ratings, asset classes and geographical regions on a single platform.
The ESMA says that the new database aims to enhance transparency by providing complete, standardised and consistent data; to improve investor protection by facilitating the comparison of rating performances of CRAs; to facilitate regulators in assessing developments in CRAs’ activities; and to reduce information asymmetries.
“With making a Central Rating Repository available to the public as of today, ESMA contributes to more transparency on ratings issued and hence improves the protection of investors,” said Steven Maijoor, chair of the ESMA. “CEREP allows the general public to assess the historical performance of credit ratings and helps to evaluate their reliability. Therefore, the launch of CEREP is a major step towards increased transparency.”
Last week, Canadian regulators released the final version of their proposed regulatory regime for credit rating agencies, which will require them to apply for recognition as a ‘designated rating organization’, and comply with a variety of requirements. It’s expected that the new regime will be deemed equivalent to the European regulatory framework, allowing ratings issued by Canadian firms to be used in Europe, too.