24 April 2014

Responses to ESMA's consultation paper on CRA 3 implementation

EACRA

EACRA welcomes that good progress has been made in several areas since ESMA's "CRA 3 Discussion Paper" in July 2013 but would none the less like to draw attention to some important concerns.

First of all, EACRA kindly asks ESMA to define more precisely the timing for all 3 RTS. Assuming that ESMA provides the RTS to the European Commission by June 2014, EACRA proceed from the assumption that the RTS shall enter into force around end of 2014 or early 2015. They kindly ask ESMA to inform the CRAs also on the "technical" timetable so that the CRA’s IT systems can be adapted to mirror the new requirements within time. Additionally, they propose that ESMA holds technical workshops with the CRAs in order to sort out the specifications in full details. Such an exchange between ESMA and the CRAs will ensure that all parties are "on the same page" and that the technical features of these RTS are properly addressed.

EACRA further notes that the draft RTS uses several terms without defining them more precisely. In order to avoid misunderstanding, they would welcome if ESMA could provide proper definitions for such terms as "investor-pays", "issuer-pays", "ancillary services", non-rating activity, "preliminary rating", "indicative rating"…

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SMSG

SMSG welcomes the consultation paper on CRA3 Implementation and acknowledges the pragmatic approach ESMA has taken which we believe will minimise the cost of compliance for credit rating agencies while at the same time delivering transparency to investors.

However they feel it is important to note that the ultimate success for ESMA of delivering against the general objective "to provide enough information to enable investors to make an informed assessment" will be determined by the functionality and usability of the European Rating Platform. They provide more detail on this in their reply letter.

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