X
    X
    X
    X

    Brexit casts doubt over rating agencies’ future in London

    Publications

    The Financial Times has reported that the UK Government faces the prospect of compiling a new regulatory regime for credit rating agencies’ activities in London as a result of the Brexit vote in June 2016. The Government may have to outline alternative arrangements in its Great Repeal Bill, the planned Act of Parliament that will seek to transpose and adapt EU law to the UK statute book. Credit rating agencies grade the creditworthiness of companies and countries and have be scrutinised in the past for their perceived failure to anticipate problems in the banking system. Currently in the UK, credit rating agencies are only overseen by the Paris based watchdog, European Securities and Markets Authority (ESMA). It is thought that the Financial Conduct Authority (FCA) or the Bank of England (BofE) are the two most likely candidates to take over this responsibility following the UK’s exit from the EU. A potential issue is that EU rules stipulate that European countries are only allowed to use ratings from an agency registered with ESMA which would therefore mean that FCA or BofE supervision may not be recognised as adequate by the EU. Ratings from agencies in non-EU countries can be certified with ESMA if their home country regulations are deemed equivalent, a finding that the European Commission can reverse at 30 days’ notice. The FCA has confirmed that it is for the UK Government to decide whether it or the BoE should have oversight of rating agencies and trade repositories.

    Disclaimer

    Please understand that your communications with Locke Lord LLP through this website do not constitute or create an attorney-client relationship with Locke Lord LLP. Any information you send to Locke Lord LLP through this website is on a non-confidential and non-privileged basis. Therefore, do not send or include any information in your email that you consider to be confidential or privileged.