Credit Rating Agencies On The Watch List : Analysis of European Regulation
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Credit rating agencies have been criticized for their role in the financial crisis by understating credit risk. The US subprime mortgage crisis highlighted the systemic relevance of the rating agencies and the deficiencies in their activities; this led to an international consensus to regulate the rating business. Written by those involved in developing European Legislation, this book explains EU Regulation in the context of global initiatives undertaken by the G-20, the Financial Stability Board, and IOSCO to address failures within the rating industry. Through an in-depth analysis of the EU Regulation's requirements on governance, conflicts of interest, methodologies, and transparency, the book provides a clear explanation of how rating agencies operate and how the identified failures have been addressed. Moreover, it examines the supervisory and enforcement powers of ESMA, the EU authority in charge of the registration and oversight of rating agencies. This is complemented with an analysis of guidance from supervisors (ESMA and EBA), IOSCO's recommendations, and US legislation. The book discusses possible new regulatory developments in areas such as the agencies' business model, competition, civil liability, and ratings of sovereign debt, in light of the Euro debt sovereign crisis. It concludes with the authors' support for an enhanced regulatory and oversight coordination at international level and for the implementation of the necessary steps to reduce the existing over-reliance on ratings.
Raquel Garcia Alcubilla has developed her career in different departments of the CNMV, mainly in the Primary Markets division. From 2006 to 2010 she combined her job at the CNMV with the position of senior officer in ESMA for the areas of rating agencies, prospectus, and takeovers. She graduated in Law and in Economics at the Comillas Pontifical University (ICADE) and in Political Science at the National Distance Learning University (UNED).
Javier Ruiz del Pozo is responsible for dealing with the registration and supervision of rating agencies. In addition, he oversees a team in charge of reviewing public offers of securities and their admission to trading, including securitisations deals. From 2006 to 2008, he was Director of financial information at ESMA in charge of rating agencies, accounting, prospectus, takeovers, ongoing disclosure requirements on listed companies, and corporate governance. He graduated in Law at the University of Navarra.• Author(s): Clear | James • Publisher: Penguin • Publisher Imprint: Penguin Random House • Subject: General Books
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