The new rules, agreed late last year, should make it easier to sue the agencies if they are judged to have made errors, such as in ranking the creditworthiness of debt. But many other ambitious planned reforms were ditched.
The European Commission, which proposed the law, had originally wanted rules to oblige companies to rotate the agencies they use for ratings, to make it easier for new entrants to get a foothold in the market. But such rotation will be limited to certain complex financial products.
"This is no great breakthrough," said Sven Giegold, a German member of the European Parliament, who played a key role in negotiating the law with EU countries. "We all wanted more and the countries did not want it."
Members of the European Parliament voted overwhelmingly in favour of the changes on Wednesday (16 January).
Michel Barnier, the European commissioner in charge of financial regulation across the European Union, said the new law would boost competition among rating agencies.
"Credit rating agencies will have to be more transparent when rating sovereign states and will have to follow stricter rules which will make them more accountable for mistakes in case of negligence or intent," he said in a statement.
Barnier had also previously suggested the creation of a European agency to rate sovereign debt. But he told lawmakers late on Tuesday that a report exploring this possibility would now only come in 2016, by which time he would have left his post.
Three agencies - Moody's, Standard & Poor's and Fitch - have a 90% share of the ratings market.