Here comes the wait reform of rating agencies, the companies that "vote" the reliability of international debtors.
The rating "triad", made up of the giants Standard & Poor's, Moody's and Fitch, will now be affected by the new regulation launched today in Strasbourg, a text which Parliament intends to "reduce excessive reliance on sovereign debt ratings".
The agencies will henceforth have to comply with certain criteria of transparency in the merits of their judgments, and will be even more make yourself responsible in case they were to issue too casually, as has often happened in recent years, hasty or incomplete judgments.
The European Commissioner for the Internal Market and Services, Michel Barnier, said he was particularly satisfied with the new reform package, which represents an important step forward for the transparency of the financial markets. In the agency market itself, the "triad" actually enjoys a monopolistic position, and the hope of the European Parliament is that the new rules can promote increased competition in the rating market, improving its efficiency and reliability.
In this case, the agencies they will not be able to issue unsolicited ratings by issuers more than three times a year, according to a schedule that must be notified in advance, by 31 December. Should they wish to publish a greater number of reports, they will have to justify the choice in detail, if the analysis has not been previously requested by a State. The ratings must be published only after the markets are closed and at least one hour before the opening of the exchanges.
As regards private issuers, these must be notified of the publication of the judgment with at least one business day in advance, to allow the company to correct any errors in advance and avoid repercussions on share prices.
The evaluations can no longer be "positive", i.e. the agencies will have to refrain from listing economic policy recipes to customers. Furthermore, the publication of anticipations on "cluster" ratings will henceforth be prohibited it will no longer be announced that creditworthiness reports of multiple countries will be published soon. The rule was introduced to avoid systemic shocks and simultaneous tensions on the financial markets.
One of the most controversial aspects of the rating market is that agencies are involved in conflicts of interest which undermine their independence. To reduce this risk it is expected that the shareholding of the agencies must be "widespread", therefore no shareholder can own more than 5% of the capital of several agencies (unless they belong to the same group), while to increase competition issuers of securitized assets will have to seek a new rating agency at least every four years (except in the case in which they already turn to minor agencies, which in this way we try to facilitate in competition with the giants of the "triad"). Issuers who simultaneously use at least four agencies that value at least 10% of the structured financial assets issued will remain exempt from the obligation.
In the event that an agency were to issue a rating in violation of the regulation, investors who rely on this rating for their activity of buying and selling assets and securities will be able to sue it.
The purpose of the new regulatory framework, in fact, is to give impetus to internal rating, releasing the issuers from the excessive link with the external rating. Today, many institutions have to sell assets that do not receive sufficient ratings (eg triple A) from agencies. This leads to the triggering of vicious circles which can lead to collapses in the market value of public and private bonds, with negative consequences on the financial stability of governments and other issuers.
For now, the establishment of a European rating agency is not envisaged, but 2016 is set as an intermediate stage to verify the effectiveness of the rules passed this morning.
