Regulation (EC) No 1060/2009
Generated by GPT-5-miniExpansion Funnel Raw 61 → Dedup 0 → NER 0 → Enqueued 0
| Regulation (EC) No 1060/2009 | |
|---|---|
| Title | Regulation (EC) No 1060/2009 |
| Type | Regulation |
| Adopted | 2009 |
| Jurisdiction | European Union |
| Official language | Treaty of Lisbon languages |
| Amends | Directive 2003/6/EC, Market Abuse Regulation (context) |
| Repealed by | Regulation (EU) No 462/2013 (partial) |
Regulation (EC) No 1060/2009
Regulation (EC) No 1060/2009 is a European Union legislative act addressing credit rating agencies and the provision of credit ratings within the European Union. Enacted in 2009, it created a framework for registration, supervision and transparency aimed at strengthening market confidence after the Global Financial Crisis of 2007–2008. The regulation interacts with instruments such as the European Securities and Markets Authority mandates and national competent authorities including Financial Conduct Authority-analogues in member states.
Background and Legislative Context
The regulation emerged against the backdrop of systemic failures highlighted by the Lehman Brothers collapse and stress in the European sovereign debt crisis, prompting proposals from the European Commission and debate in the European Parliament and the Council of the European Union. Influential reports by the International Monetary Fund, the Bank for International Settlements and the Financial Stability Board informed the drafting, while legal foundations rested on powers in the Treaty on the Functioning of the European Union. Adoption followed trilogue negotiations among José Manuel Barroso's Commission, committees chaired by members of the European Parliament such as Kaja Kallas-era groups, and representatives of member states including ministers from Germany, France and Italy.
Scope and Key Definitions
The regulation defines "credit rating agencies" in relation to activities covered by the Prospectus Directive and instruments traded on markets like those regulated by Euronext and Deutsche Börse. It distinguishes between structured finance ratings, sovereign ratings, and corporate ratings, referencing entities such as European Investment Bank-issued instruments and securities under the Markets in Financial Instruments Directive 2004/39/EC. The definition set is integral for interaction with institutions like the European Central Bank when assessing collateral and interacts with law enforcement cooperation involving the European Public Prosecutor's Office in fraud cases.
Transparency and Issuer Obligations
Transparency requirements impose disclosure duties on issuers and agencies for ratings issued on instruments from entities such as BP plc, Deutsche Bank, or TotalEnergies SE and for structured products like those linked to ABN AMRO securitisations. The regulation obliges publication of methodologies akin to those used by agencies covering corporations such as Apple Inc. and sovereigns such as Greece or Spain. It mandates communication protocols with market infrastructures including Euroclear and Clearstream, and aligns with reporting under the International Organization of Securities Commissions standards and the Accounting Standards Committee (IASB)-influenced disclosures.
Rating Agency Registration and Supervision
Agencies are required to register with the European supervisory framework, notably the European Securities and Markets Authority which coordinates with national authorities such as BaFIN, Autorité des marchés financiers and the Comisión Nacional del Mercado de Valores. The registration process evaluates internal controls, record-keeping, and compliance with rules similar to those applied by the Securities and Exchange Commission. Registered agencies include major firms like Moody's Investors Service, Standard & Poor's and Fitch Ratings which had to adapt governance to satisfy European Banking Authority-adjacent scrutiny and ongoing supervision regimes.
Governance, Conflicts of Interest and Independence
Governance provisions target conflicts associated with firms that provide advisory services to issuers such as HSBC or Goldman Sachs. Measures require firewalls, independent oversight boards, and remuneration policies to mitigate incentives recognizable from controversies involving Lehman Brothers-era structured finance practices. The regulation draws on corporate governance principles popularised by entities such as the OECD and references accountability mechanisms similar to those applied in World Bank procurement governance.
Enforcement, Sanctions and Compliance Measures
Sanctions regimes empower ESMA and national authorities to suspend, withdraw or limit registration and to impose fines in cases comparable to enforcement actions by the United States Department of Justice or Commodity Futures Trading Commission. Compliance monitoring uses on-site inspections and periodic reporting analogous to oversight by the Federal Reserve for supervised entities. Cross-border cooperation mechanisms reference mutual assistance instruments used between European Central Bank-supervised institutions and member state authorities.
Impact, Criticism and Reforms
The regulation altered market reliance on major agencies and prompted diversification through initiatives such as increased use of internal credit assessments by institutions like Deutsche Bank and issuance of ratings by local agencies in Spain and Italy. Critics from academics affiliated with institutions like London School of Economics and think tanks such as Bruegel argued that the framework insufficiently addressed procyclicality and market concentration favoring incumbents like Moody's Investors Service. Subsequent reforms and supplementary measures led to amendments and related acts involving the European Parliament and resulted in enhanced powers for ESMA and integration with directives touching the Capital Requirements Regulation and Markets in Financial Instruments Regulation.