Freedom of information request - Rating Credit Raters

La demande est partiellement réussie.

Dear European Securities and Markets Authority (ESMA),

Under the right of access to documents in the EU treaties, as developed in Regulation 1049/2001, I am requesting documents which contain the following information:

Background - Infrangilis is a UK based think-tank that focuses on resiliency strategies, and is conducting research on the performance of Credit Rating Agencies. At the end of May 2012 we will publish a study comparing and contrasting the performance of the industry entitled “Rating Credit Raters: Sovereign Credit Rating Agencies – Political Scapegoats or Misguided Bullies?” This international study will look at the practices of firms including: Moody’s, S&P, Fitch, DBRS, JCR, R&I, and Dagong, amongst others.

To support this we need you to answer the below questions. (Data is gratefully requested per year over the last 5 years).

Please note: Infrangilis will not accept unreasonable excuses for not supplying the information requested and any such unhelpful action will be reported in all media outreach associated with the launch of the report.

Thank you for your assistance in this matter.

1. Conflicts of interest – how many complaints/ letters expressing concern has ESMA received against the industry or one of its members? (against which firms? do you categorise the nature of the complaint and if so what were these?)

2. Inaccurate assessments/incompetent performance – how many complaints/ letters expressing concern has ESMA received against the industry or one of its members? (against which firms? do you categorise the nature of the complaint and if so what were these?)

3. Business meetings with senior ESMA officials – how many times has the industry/ one of its members met with your DG at your offices? (who was this with? do you categorise the nature of the meetings and if so what where these?)

4. Industry events – how many times have senior ESMA officials accepted invitations to industry-sponsored gatherings or drinks/meals? (who was the sponsor? who was the public official? do you categorise the nature of the event and if so what were these?)

5. Resources deployed – how many people and how much budget is dedicated to dealing with this industry? (absolute numbers, % of total ESMA budget) was any of the budget given to/ shared with the industry? (if so who and how much?).

Do also feel free to contact me if you need clarification on this research.

Yours faithfully,

philip monaghan

Stephan Karas, Autorité européenne des marchés financiers

Dear Mr Monaghan

 

Thank you for your recent request to the European Securities and Markets
Authority (ESMA) for access to documents under Regulation 1049/2001.

 

For your background information ESMA became operational on 1 January 2011
under Regulation (EU) 1095/2010 and took over responsibility for the
registration and supervision of Credit Rating Agencies (CRAs) on 1 July
2011 under Regulation (EU) 1060/2009 therefore information can only be
provided for the time period beginning 1 July 2011.

 

Please find below responses to your queries:

 

1. Conflicts of interest – how many complaints/ letters expressing concern
has ESMA received against the industry or one of its members? (against
which firms? do you categorise the nature of the complaint and if so what
were these?)

 

ESMA Response – Since the 1 July 2011 ESMA has received a total of 3
complaints relating to registered Credit Rating Agencies.

 

In general these complaints referred to lack of compliance with the
requirements on the presentation and disclosure of ratings and in
particular:

 

·         2 complaints were on the disclosure of the attributes and
limitations of ratings; and

 

·         1 on the explanation of the rationale of the rating.

 

However, ESMA is unable to provide you with the names of the CRAs to which
the complaint letters relate.  This is because, in line with Article 4 of
Regulation (EC) 1049/2001 on access to documents and Article 32(2) of
Regulation (EC) No 1060/2009 on Credit Rating Agencies, to do so would
undermine the protection of commercial interests of the CRA in breach of
our obligation to keep information acquired by us under Regulation (EC)
1049/2001 confidential.  We do not consider there is an overriding public
interest in disclosure of this information.

 

You may, within 15 working days of receiving this email, make a
confirmatory application to us asking us to reconsider our position not to
disclose this information.

 

2. Inaccurate assessments/incompetent performance – how many complaints/
letters expressing concern has ESMA received against the industry or one
of its members? (against which firms? do you categorise the nature of the
complaint and if so what were these?)

 

ESMA Response – Please refer to the answer to Question 1 above.

 

3. Business meetings with senior ESMA officials – how many times has the
industry/ one of its members met with your DG at your offices? (who was
this with? do you categorise the nature of the meetings and if so what
where these?)

 

ESMA Response - For details of ESMA Senior Management External Meetings
i.e. those of the Chair and Executive Director, including those with
financial industry participants, please refer to our Key Dates information
for 2012 and 2011:

 

2012 -
[1]http://www.esma.europa.eu/system/files/c...

 

2011 - [2]http://www.esma.europa.eu/system/files/2....

 

4. Industry events – how many times have senior ESMA officials accepted
invitations to industry sponsored gatherings or drinks/meals? (who was the
sponsor? who was the public official? Do you categorise the nature of the
event and if so what were these?)

 

ESMA Response - Please refer to the details provided in the key dates
documents above.

 

5. Resources deployed – how many people and how much budget is dedicated
to dealing with this industry? (absolute numbers, % of total ESMA budget)
was any of the budget given to/ shared with the industry? (if so who and
how much?).

 

ESMA Response - Please find details below of ESMA’s budgets for 2011 and
2012 which include allocations for supervision and on-site visit
activities:

 

ESMA Budget 2011
[3]http://www.esma.europa.eu/system/files/B...

 

ESMA Budget 2012 [4]http://www.esma.europa.eu/system/files/2...

 

In terms of staff allocated to the registration and supervision of CRAs,
this currently stands at a total of 13 members of staff.

 

 

Yours sincerely,

 

Stephan Karas

Head of Legal Cooperation and Convergence

European Securities and Markets Authority

 

References

Visible links
1. http://www.esma.europa.eu/system/files/c...
2. http://www.esma.europa.eu/system/files/2...
3. http://www.esma.europa.eu/system/files/B...
4. http://www.esma.europa.eu/system/files/2...