The European Securities and Markets Authority has issued a Supervisory Briefing, providing guidance to sectoral national regulators on the application of certain requirements to use smaller credit rating agencies under the Credit Rating Agencies Regulation. The CRA Regulation aims to create more competition in the EU credit ratings industry and includes requirements for issuers and related third parties regarding the appointment of multiple credit rating agencies to an issuance or entity. In particular, there is a double credit rating requirement for structured finance instruments, and, where this double credit rating requirement applies, issuers or related third parties must consider appointing at least one smaller CRA with no more than a 10% market share. Where it is decided that a smaller CRA will not be appointed, that decision must be documented.

The purpose of the guidance is to promote a common supervisory approach and enforcement of these requirements. The guidance clarifies which issuers and related third parties are within the scope of the requirements and provides a standard form to be used for documenting a decision not to appoint a smaller CRA. The Supervisory Briefing is not binding on regulators or market participants.

View the Supervisory Briefing.