EUROPE: EBA, ESMA and EIOPA Publish Final Report on Mechanistic References to Credit Ratings in the ESAs` Guidelines and Recommendations

Thursday February 6 2014

The Joint Committee of the three European Supervisory Authorities (EBA, ESMA and EIOPA – ESAs) has published its final Report on mechanistic references to credit ratings in the ESAs’ guidelines and recommendations and on the definition of “sole and mechanistic reliance” on such ratings.

In accordance with the Credit Rating Agencies Regulation (CRA 3), the EBA, ESMA and EIOPA have reviewed all their existing guidelines and recommendations in order to identify, and where appropriate remove, references to external credit ratings that could trigger sole or mechanistic reliance on such ratings.

This final report includes the amendments to ESMA’s Guidelines on Money Market Funds (MMF) according to the definition of ‘sole and mechanistic reliance’ contained therein. This common definition aims at harmonising the different interpretations of ‘sole and mechanistic reliance’ in the ESAs regulations and guidelines.

This definition, to which the ESAs intend to refer to in all their future guidelines, recommendations and draft technical standards, was developed taking into account all the comments received during the public consultation that ended on 5 December 2013.

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