Committee of Permanent Representatives approved regulation on credit rating agencies drafted by the Czech Presidency

Prague, March 6th, 2009

Preparation of regulation on credit rating agencies - an important item on the agenda of the Czech Presidency, has significantly progressed.

After intense negotiations with Member States led by the Czech Presidency the Committee of Permanent Representatives of Member States (COREPER) approved the unified opinion of the Council on the regulation proposal.

Czech Presidency has thus acquired a mandate for further negotiations with the European Parliament on the final wording of the text. The regulation stipulates conditions for activities of the credit rating agencies in the European Union, their registration and control. It is one of the measures responding to the current financial crisis. The regulation of credit rating agencies is an important step in the context of fulfilment of the EU action plan.

The draft regulation further stipulates rules for issuing ratings, informing of investors and, in effect, for prevention of conflict of interest during activities of the credit rating agencies. The agencies should publish information on the results of their past ratings, which would allow the users (financial institutions and investors) to assess their quality.

The supervision over the activities of credit rating agencies represents another dramatic change in the system. Collective control authorities will be established to register rating agencies and oversee their activities. These authorities should improve coordination and exchange of information between individual Member States.

In comparison with the standard situation in European institutions, the process of approval of the regulation on credit rating agencies has been unusually fast. The European Commission published a draft regulation no earlier than in November 2008. The principal part of the negotiations has thus fallen to the Czech Presidency. The Presidency initiated a number of changes that should help set up adequate conditions for the activities of credit rating agencies as well as more effective control of such activities. The final text of the regulation is subject to adoption by the European Parliament, which should conclude the negotiations before the end of the current term, i.e. no later than in May.

The approval of the compromise version of the regulation is a significant positive gesture toward markets and investors. It is also a clear signal for the global partners of the EU – regulation of rating agencies will be one of the key items on the agenda of the G20 Summit in April.

Radka Kohutová, Spokeswoman of the Ministry of Finance