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European regulators are proposing guidance that aims to ensure credit rating agencies (CRAs) have effective internal controls.

The European Securities and Markets Authority (ESMA) launched a consultation on Thursday on proposed guidance that sets out the systems and internal controls that rating agencies must have to meet the requirements of the rules governing CRAs.

ESMA said that the need for more guidance was revealed during its oversight work over the past couple of years.

“The accuracy and integrity of credit ratings is fundamental to ensuring that users have reliable sources of information to inform their investment decisions, while supporting investor protection and stable and orderly markets,” said Steven Maijoor, chair of ESMA.

“Investors need to know that those producing the ratings have adequate systems in place to ensure their accuracy and integrity,” he said.

The proposed guidance aims to clarify ESMA’s expectations in this area, which “will promote a more consistent approach to internal controls amongst registered CRAs and set the marker for new entrants to the industry,” he said.

ESMA aims to publish final guidance by the third quarter of 2020.

The deadline for today’s consultation is Mar. 16, 2020.