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12-08AD ASIC welcomes international endorsement of Australia’s regulatory regime on credit rating agencies

Wednesday 25 January 2012

ASIC has welcomed the announcement by the European Securities and Markets Authority (ESMA) that it has endorsed Australia’s regulatory regime on credit rating agencies (CRAs).

The endorsement follows a careful assessment of Australia’s regulatory framework for CRAs and the agreement of a Memorandum of Understanding with ASIC on cooperation for the supervision of CRAs, after which the ESMA concluded that Australia’s CRA regulation is ‘as stringent’ as the regulation in the European Union (EU).

‘Since 1 January 2010, ASIC’s implementation of strengthened credit rating agency regulation has aligned Australia’s regulation with the International Organization of Securities Commissions (IOSCO) principles and with regulation in major markets such as the United States, Europe and Japan’ ASIC Chairman Greg Medcraft said.

‘ESMA’s endorsement of Australia’s CRA regulation will facilitate Australian debt issuers’ use of their Australian-issued credit ratings in the European Union’, Mr Medcraft added.

ESMA’s endorsement decision comes ahead of EU restrictions on use of third country credit ratings set to take effect from 1 May 2012.

At this stage, only Australian and Japanese CRA regulation have been endorsed by ESMA.


Following an announcement by the Australian Government in May 2008, ASIC and Treasury conducted a review of the Australian regulatory framework for CRAs and research houses.

On 13 November 2008, the Government announced that ASIC would remove a licensing exemption held by certain CRAs and require all CRAs to hold an Australian financial services (AFS) licence. This new regime came into effect on 1 January 2010.

In addition to the general licensee obligations, ASIC imposes specially tailored conditions on AFS licences granted to credit rating agencies. These tailored licence conditions require credit rating agencies to, among other things, comply with the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies (for additional information, see 09-224MR ASIC outlines improvements to regulation of credit rating agencies in Australia).

ASIC has provided guidance on annual compliance reporting by CRAs and certain AFS requirements for CRAs in Information Sheet 147 Credit rating agencies: Lodging a compliance report with ASIC and Information Sheet 143 Credit rating agencies: Guidance on certain AFS licence conditions.

ESMA is an independent EU Authority that contributes to safeguarding the stability of the European Union’s financial system by ensuring the integrity, transparency, efficiency and orderly functioning of securities markets, as well as enhancing investor protection.

ESMA’s announcement that it had endorsed Australia’s regulatory regime on CRA can be accessed online (PDF download 165KB):

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