Use of Non-EU Ratings in the EU

Garcia Alcubilla and Ruiz del Pozo

in Credit Rating Agencies on the Watch List

Published in print March 2012 | ISBN: 9780199608867
Published online May 2012 | e-ISBN: 9780191739125 | DOI:
Use of Non-EU Ratings in the EU

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Agencies domiciled in non-EU countries do not need to be registered in order to issue ratings on EU issuers or on securities offered in the EU. However, these ratings may not be used for regulatory purposes by European financial institutions if they do not follow one of the two procedures set out in the Regulation: endorsement or certification based on equivalence (depending on the systemic importance of the foreign rating agency). This chapter explains the procedures and the requirements that non-EU agencies have to fulfil. In addition, it describes ESMA’s methodology to assess equivalence and its work in this area and on the signing of cooperation arrangements with non-EU authorities. Finally, a more detailed discussion on the US framework, including the SEC’s rules and the new provisions introduced by the Dodd–Frank Act, and an overview of the Japanese legislation on rating agencies are provided in the appendices.

Keywords: endorsement; certification; equivalence; systemic importance; cooperation arrangement; US; NRSRO; Dodd–Frank Act; SEC; Japan

Chapter.  8290 words. 

Subjects: Financial Markets

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