Credit Rating Agencies (Regulation)
The wishes to limit the term of the contracts entered into by credit rating agencies and issuers as well as the participation volume in credit rating agencies in order to strengthen the independence of credit rating agencies. In future, structured finance instruments will be subjected to ratings by at least two credit rating agencies. Moreover, the Commission wishes to prescribe civil liability for credit rating agencies.
Viewed from a competitive economic standpoint, there is no need for regulation. Credit rating regulation is justified only for supervisory purposes due to the stability of the financial market. Although the rotation rule increases the independence of credit rating agencies, it also distorts competition, reduces the quality of ratings and thus has a negative impact on growth. The rule on double ratings for structured finance instruments jeopardizes the stability of the financial market.