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New Credit Ratings Database Launched by the EU Watchdog

The European Union’s markets watchdog launched a free online database for investors and the general public to compare credit ratings from rival agencies as part of wider efforts to increase transparency and competition.

The European Securities and Markets Authority (ESMA) supervises the 15 ratings agencies authorised to operate in the EU, a sector dominated by a so-called “Big Three” — Fitch , Moody’s, and Standard & Poor’s.

The central rating repository (CEREP) will be updated twice a year, allowing investors for the first time to assess on a single platform a wide range of ratings. CEREP allows the general public to assess the historical performance of credit ratings and helps to evaluate their reliability,” ESMA chairman Steven Maijoor said.

Policymakers across the world have been injecting more transparency into a sector accused of helping to sow the seeds for the financial crisis and being too slow to warn investors.

A draft EU law being approved aims to increase competition in the sector by requiring users to “rotate” or switch the credit rating agency they use after a certain period of time.

Source:  Reuters

BIIA: Comment:  This is another example of government waste and meddling in private sector information.  How useful is data for individual investors and the general public particularly when it is six months old? 
Unfortunately no one in the information industry has picked up on this perceived need to create an online database with current comparisons of ratings and their respective performance.  The answer to that is most likely that there is no such need for doing this. 
Increasing competition through legislation is another futile exercise and wishful thinking within the EU Commission.  As Julius Kroll, the latest newcomer on the ratings scene has noted recently that building a new ratings business is easier said than done.  Deregulation of the ratings industry would be one way of doing this.  Let investor decide who is competent and who is not.

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