The key element of the agreement, reached on Wednesday (15 April) between representatives of the European Parliament, member states and the Commission, concerns the registration and supervision of rating agencies.
According to the deal, the Committee of European Securities Regulators (CESR), a body made up of national regulators, will be placed in temporary charge of registering credit rating agencies. Registration has not so far been required.
The new rules require the CESR to manage a database of historical performance information about rating agencies operating in the EU. This should allow users of rating services - such as investors - to quickly verify the accuracy of economic predictions and compare them with competitors.
Parliament 'very satisfied'
Supervision of rating agencies will be carried out at national level during the initial phase and will therefore be passed on to the new authority. The deal was welcomed by the European Parliament, which had been pushing for a single EU body dealing with registration and supervision of rating agencies.
"I am very satisfied by the agreement," said Jean-Paul Gauzès MEP (EPP-ED, France), who is in charge of the dossier. "It takes into account the issues raised by the Parliament," he told EurActiv.
The agreement has been accepted by national governments too, although they were keen to keep supervision under their control. As a compromise, supervision will remain in the hands of national capitals until 2010, when the new European supervisory body is to be established. Some have not ruled out new negotiations, which may be necessary to define the precise role of the new pan-European supervisor once it is established.
Under the new rules, credit rating agencies will have an obligation to disclose the names of rated companies that contribute to more than 5% of an agency's revenue. This is to prevent biased ratings driven by financial interest. They will also be forbidden to rate companies of which their analysts own shares or financial products. The consulting and advisory role of rating agencies will also be denied to companies which are themselves subject to rating. Analysts will be forced to rotate in order to avoid becoming too close to the industry sector they rate.
Vote on Capital Requirements Directive postponed
The Parliament will vote the new text during its plenary session in Strasbourg next week. A vote on Solvency II, the new set of rules for the insurance sector, is also scheduled for that session. The EU Council of Ministers is expected to give the final seal of approval to the two pieces of legislation before the summer.
Meanwhile, a vote on the Capital Requirements Directive for the banking sector has been postponed until the May session of the European Parliament after the EU institutions failed to reach an agreement. The main outstanding issue remains capital requirements related to securitised products, which were at the origin of the current crisis, as underlined by the MEP in charge of the dossier Othmar Karas (EPP-ED, Austria).