European Supervisory Authorities consult on the removal of mechanistic reliance on credit ratings

The Joint Committee of the European Supervisory Authorities (EBA, ESMA and
EIOPA - ESAs) is launching today a one-month public consultation on the
removal of mechanistic references to credit ratings in their guidelines
and on the definition of sole and mechanistic reliance on such ratings.

The term "sole and mechanistic reliance on credit ratings" is mentioned
in Article 5b(1) of the European Regulation on Credit Rating Agencies
(Regulation (EU) No 462/2013). However, neither its formal definition nor
explanations of its meaning are included in the document.

In order to have a common approach towards this issue, the ESAs have
developed a definition of "sole and mechanistic reliance", and are
consulting with market participants on whether this definition is clear
and can be used in practice. The consultation paper contains:
a proposed definition for "sole or mechanistic reliance", including
examples;the provisions in the three ESAs' guidelines that are not to be
defined as mechanistic; andthose provisions that are to be considered as
mechanistic and therefore should be amended.


The ESAs intend to refer to this definition in all their future guidelines,
recommendations and draft technical standards where relevant.

The current public consultation also contributes to the initiative of the
Financial Stability Board to reduce the reliance on ratings.

The consultation paper is available on the websites of the three ESAs: EBA,
ESMA and EIOPA:
https://eiopa.europa.eu/consultations/consultation-papers/index.html
(Link:
https://eiopa.europa.eu/consultations/consultation-papers/index.html )
The consultation will end on 5 December 2013 cob.


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