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cras, the commission, and consultation September 3, 2008

Posted by Bradley in : Uncategorized , trackback

EACT, the European Associations of Corporate Treasurers, don’t like the Commission’s proposals for regulating credit rating agencies. EACT have produced a 23 page response to the Commission’s consultation, a consultation period which expires on Friday, and was truncated:

It was not possible for Commission services to start the consultation period earlier given the fact that the advice of the Committee of European Securities Regulators (CESR) and the report of European Securities Markets Expert group (ESME) were delivered only in May and June this year respectively. These contributions had been prepared on the request of the Commission and offered the necessary basis for the Commission services’ work in this area. Moreover, a substantial amount of time in the preparatory phase has been devoted to eventually unsuccessful attempts to create a self-regulatory solution for the CRA industry.
Neither is it possible to extend the consultation period later in September: in view of the forthcoming elections, the European Parliament has agreed with the European Commission to accept the Commission proposals to be dealt in co-decision only by October 2008 at the latest. This implies that the Commission services will need to launch and finalise an Interservice Consultation in September 2008 in order to meet this deadline. Commission services will compensate the short consultation period by individually encouraging important stakeholders (including regulators, Member States and the CRAs) to participate in the public consultation.

I’m not convinced that making sure to encourage the important stakeholders to participate really does compensate for a shortened consultation period (especially one that has taken place while many people have been on vacation, as noted by EACT). And this is yet another consultation exercise which seems to be being carried out only in English. As to the substance, EACT suggests the proposed rules are too detailed (rules-based regulation, rather than principles-based regulation), will impede competition, and risk conflicting with rules being introduced in other jurisdictions.

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