ESMA publishes draft RTS on CRA3 transparency
01 July 2014 Paris
Image: Shutterstock
The European Securities and Markets Authority (ESMA) has published its final report on draft Regulatory Technical Standards (RTS) required under the Credit Rating Agencies (CRA3) regulation regarding information on transparency of structured finance instruments, the European Rating Platform and periodic reporting of fees charged by credit rating agencies.
The draft RTS, which complements the existing regulatory framework for credit rating agencies (CRAs), covers disclosure requirements on structured finance instruments (SFIs), the European Rating Platform (ERP) and the periodic reporting on fees charged by CRAs.
Steven Maijoor, ESMA chair, said: “The enhanced transparency requirements set out in these draft RTS regarding structured finance instruments, CRAs’ fees and ratings will improve the information available to both investors and supervisors.”
“Their implementation will contribute to a reduction in conflicts of interest, improved investor protection and market stability, and greater competition between CRAs.”
The draft RTS on structured finance instruments (SFI) focuses on the information that the issuer, originator and sponsor of a structured finance instrument must publish.
This incorporates, where possible, existing disclosure and reporting requirements adopted by the European Central Bank and Bank of England to avoid duplication and overlap. The disclosure obligations also provide for standardised investor reporting and disclosure of transaction documents.
ESMA will develop reporting obligations concerning private and bilateral structured finance instruments as soon as possible.
The draft RTS on the new ERP defines the content and presentation of rating information, including structure, format, method and timing of reporting that credit rating agencies should submit to ESMA for credit ratings that are not exclusively produced for and disclosed to investors for a fee.
The third RTS defines the content and the format of periodic reporting on fees charged by credit rating agencies for the purpose of on-going supervision by ESMA.
The information collected under this RTS will allow ESMA to undertake effective oversight of fees charged by credit rating agencies.
This will enable ESMA to verify whether pricing practices are discriminatory and ensure compliance with the principle of fair competition and further mitigate conflicts of
interest.
The draft RTS have been submitted to the European Commission for its approval, it now has three months to decide whether to endorse the draft RTS.
The draft RTS, which complements the existing regulatory framework for credit rating agencies (CRAs), covers disclosure requirements on structured finance instruments (SFIs), the European Rating Platform (ERP) and the periodic reporting on fees charged by CRAs.
Steven Maijoor, ESMA chair, said: “The enhanced transparency requirements set out in these draft RTS regarding structured finance instruments, CRAs’ fees and ratings will improve the information available to both investors and supervisors.”
“Their implementation will contribute to a reduction in conflicts of interest, improved investor protection and market stability, and greater competition between CRAs.”
The draft RTS on structured finance instruments (SFI) focuses on the information that the issuer, originator and sponsor of a structured finance instrument must publish.
This incorporates, where possible, existing disclosure and reporting requirements adopted by the European Central Bank and Bank of England to avoid duplication and overlap. The disclosure obligations also provide for standardised investor reporting and disclosure of transaction documents.
ESMA will develop reporting obligations concerning private and bilateral structured finance instruments as soon as possible.
The draft RTS on the new ERP defines the content and presentation of rating information, including structure, format, method and timing of reporting that credit rating agencies should submit to ESMA for credit ratings that are not exclusively produced for and disclosed to investors for a fee.
The third RTS defines the content and the format of periodic reporting on fees charged by credit rating agencies for the purpose of on-going supervision by ESMA.
The information collected under this RTS will allow ESMA to undertake effective oversight of fees charged by credit rating agencies.
This will enable ESMA to verify whether pricing practices are discriminatory and ensure compliance with the principle of fair competition and further mitigate conflicts of
interest.
The draft RTS have been submitted to the European Commission for its approval, it now has three months to decide whether to endorse the draft RTS.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
