This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Union.
It shall apply from its date of entry into force. However:
—
Article 4(1) shall apply from 7 December 2010 and
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points (f), (g) and (h) of Article 4(3) shall apply from 7 June 2011.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Strasbourg, 16 September 2009.
For the European Parliament
The President
J. BUZEK
For the Council
The President
C. MALMSTRÖM
(1) Opinion of 13 May 2009 (not yet published in the Official Journal).
(2) OJ C 115, 20.5.2009, p. 1.
(3) Opinion of the European Parliament of 23 April 2009 (not yet published in the Official Journal) and Council Decision of 27 July 2009.
(4) OJ L 96, 12.4.2003, p. 16.
(5) OJ L 177, 30.6.2006, p. 1.
(6) OJ L 177, 30.6.2006, p. 201.
(7) OJ L 375, 31.12.1985, p. 3. Directive replaced, with effect from 1 July 2011, by Directive 2009/65/EC of the European Parliament and of the Council (See page 32 of this Official Journal).
(8) OJ L 235, 23.9.2003, p. 10.
(9) OJ L 345, 31.12.2003, p. 64.
(10) OJ L 149, 30.4.2004, p. 1.
(11) OJ C 59, 11.3.2006, p. 2.
(12) OJ L 25, 29.1.2009, p. 18.
(13) OJ L 52, 25.2.2005, p. 51.
(14) OJ L 281, 23.11.1995, p. 31.
(15) OJ L 184, 17.7.1999, p. 23.
(16) OJ L 193, 18.7.1983, p. 1.
(17) OJ L 145, 30.4.2004, p. 1.
(18) OJ L 339, 24.12.2003, p. 73.
(19) Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (OJ L 241, 2.9.2006, p. 26).
(20) OJ L 228, 16.8.1973, p. 3.
(21) OJ L 345, 19.12.2002, p. 1.
(22) OJ L 323, 9.12.2005, p. 1.
(23) OJ L 25, 29.1.2009, p. 23.
(24) OJ L 25, 29.1.2009, p. 28.
(25) OJ L 191, 13.7.2001, p. 45.
ANNEX I
INDEPENDENCE AND AVOIDANCE OF CONFLICTS OF INTEREST
Section A
Organisational requirements
1. The credit rating agency shall have an administrative or supervisory board. Its senior management shall ensure that:
(a)
credit rating activities are independent, including from all political and economic influences or constraints;
(b)
conflicts of interest are properly identified, managed and disclosed;
(c)
the credit rating agency complies with the remaining requirements of this Regulation.
2. A credit rating agency shall be organised in a way that ensures that its business interest does not impair the independence or accuracy of the credit rating activities.
The senior management of a credit rating agency shall be of good repute and sufficiently skilled and experienced, and shall ensure the sound and prudent management of the credit rating agency.
At least one third, but no less than two, of the members of the administrative or supervisory board of a credit rating agency shall be independent members who are not involved in credit rating activities.
The compensation of the independent members of the administrative or supervisory board shall not be linked to the business performance of the credit rating agency and shall be arranged so as to ensure the independence of their judgement. The term of office of the independent members of the administrative or supervisory board shall be for a pre-agreed fixed period not exceeding five years and shall not be renewable. The dismissal of independent members of the administrative or supervisory board shall take place only in case of misconduct or professional underperformance.
The majority of members of the administrative or supervisory board, including its independent members, shall have sufficient expertise in financial services. Provided that the credit rating agency issues credit ratings of structured finance instruments, at least one independent member and one other member of the board shall have in-depth knowledge and experience at a senior level of the markets in structured finance instruments.
In addition to the overall responsibility of the board, the independent members of the administrative or supervisory board shall have the specific task of monitoring:
(a)
the development of the credit rating policy and of the methodologies used by the credit rating agency in its credit rating activities;
(b)
the effectiveness of the internal quality control system of the credit rating agency in relation to credit rating activities;
(c)
the effectiveness of measures and procedures instituted to ensure that any conflicts of interest are identified, eliminated or managed and disclosed; and
(d)
the compliance and governance processes, including the efficiency of the review function referred to in point 9 of this Section.
Opinions of the independent members of administrative or supervisory board issued on the matters referred to in points (a) to (d) shall be presented to the board periodically and shall be made available to the competent authority on request.
3. A credit rating agency shall establish adequate policies and procedures to ensure compliance with its obligations under this Regulation.
4. A credit rating agency shall have sound administrative and accounting procedures, internal control mechanisms, effective procedures for risk assessment, and effective control and safeguard arrangements for information processing systems.
Those internal control mechanisms shall be designed to secure compliance with decisions and procedures at all levels of the credit rating agency.
A credit rating agency shall implement and maintain decision-making procedures and organisational structures which clearly and in a documented manner specify reporting lines and allocate functions and responsibilities.
5. A credit rating agency shall establish and maintain a permanent and effective compliance function department (compliance function) which operates independently. The compliance function shall monitor and report on compliance of the credit rating agency and its employees with the credit rating agency’s obligations under this Regulation. The compliance function shall:
(a)
monitor and, on a regular basis, assess the adequacy and effectiveness of the measures and procedures put in place in accordance with point 3, and the actions taken to address any deficiencies in the credit rating agency’s compliance with its obligations;
(b)
advise and assist the managers, rating analysts, employees as well as any other natural person whose services are placed at the disposal or under the control of the credit rating agency or any person directly or indirectly linked to it by control who is responsible for carrying out credit rating activities, to comply with the credit rating agency’s obligations under this Regulation.
6. In order to enable the compliance function to discharge its responsibilities properly and independently, a credit rating agency shall ensure that the following conditions are satisfied:
(a)
the compliance function has the necessary authority, resources, expertise and access to all relevant information;
(b)
a compliance officer is appointed and is responsible for the compliance function and for any reporting with regard to compliance required by point 3;
(c)
the managers, rating analysts, employees and any other natural person whose services are placed at the disposal or under the control of the credit rating agency or any person directly or indirectly linked to it by control who is involved in the compliance function is not involved in the performance of credit rating activities they monitor;
(d)
the compensation of the compliance officer is not linked to the business performance of the credit rating agency and is arranged so as to ensure the independence of his or her judgement.
The compliance officer shall ensure that any conflicts of interest relating to the persons placed at the disposal of the compliance function are properly identified and eliminated.
The compliance officer shall report regularly on the carrying out of his or her duties to senior management and the independent members of the administrative or supervisory board.
7. A credit rating agency shall establish appropriate and effective organisational and administrative arrangements to prevent, identify, eliminate or manage and disclose any conflicts of interest referred to in point 1 of Section B. It shall arrange for records to be kept of all significant threats to the independence of the credit rating activities, including those to the rules on rating analysts referred to in Section C, as well as the safeguards applied to mitigate those threats.
8. A credit rating agency shall employ appropriate systems, resources and procedures to ensure continuity and regularity in the performance of its credit rating activities.
9. A credit rating agency shall establish a review function responsible for periodically reviewing its methodologies, models and key rating assumptions, such as mathematical or correlation assumptions, and any significant changes or modifications thereto as well as the appropriateness of those methodologies, models and key rating assumptions where they are used or intended to be used for the assessment of new financial instruments.
That review function shall be independent of the business lines which are responsible for credit rating activities and report to the members of the administrative or supervisory board referred to in point 2 of this Section.
10. A credit rating agency shall monitor and evaluate the adequacy and effectiveness of its systems, internal control mechanisms and arrangements established in accordance with this Regulation and take appropriate measures to address any deficiencies.
Section B
Operational requirements
1. A credit rating agency shall identify, eliminate or manage and disclose, clearly and prominently, any actual or potential conflicts of interest that may influence the analyses and judgments of its rating analysts, employees, or any other natural person whose services are placed at the disposal or under the control of the credit rating agency and who are directly involved in the issuing of credit rating and persons approving credit ratings.
2. A credit rating agency shall disclose to the public the names of the rated entities or related third parties from which it receives more than 5 % of its annual revenue.
3. A credit rating agency shall not issue a credit rating in any of the following circumstances, or shall, in the case of an existing credit rating, immediately disclose where the credit rating is potentially affected by the following:
(a)
the credit rating agency or persons referred to in point 1, directly or indirectly owns financial instruments of the rated entity or a related third party or has any other direct or indirect ownership interest in that entity or party, other than holdings in diversified collective investment schemes, including managed funds such as pension funds or life insurance;
(b)
the credit rating is issued with respect to the rated entity or a related third party directly or indirectly linked to the credit rating agency by control;
(c)
a person referred to in point 1 is a member of the administrative or supervisory board of the rated entity or a related third party; or
(d)
a rating analyst who participated in determining a credit rating, or a person who approved a credit rating, has had a relationship with the rated entity or a related third party which may cause a conflict of interests.
A credit rating agency shall also immediately assess whether there are grounds for re-rating or withdrawing the existing credit rating.
4. A credit rating agency shall not provide consultancy or advisory services to the rated entity or a related third party regarding the corporate or legal structure, assets, liabilities or activities of that rated entity or related third party.
A credit rating agency may provide services other than issue of credit ratings (ancillary services). Ancillary services are not part of credit rating activities; they comprise market forecasts, estimates of economic trends, pricing analysis and other general data analysis as well as related distribution services.
A credit rating agency shall ensure that the provision of ancillary services does not present conflicts of interest with its credit rating activities and shall disclose in the final ratings reports any ancillary services provided for the rated entity or any related third party.
5. A credit rating agency shall ensure that rating analysts or persons who approve ratings do not make proposals or recommendations, either formally or informally, regarding the design of structured finance instruments on which the credit rating agency is expected to issue a credit rating.
6. A credit rating agency shall design its reporting and communication channels so as to ensure the independence of the persons referred to in point 1 from the other activities of the credit rating agency carried out on a commercial basis.
7. A credit rating agency shall arrange for adequate records and, where appropriate, audit trails of its credit rating activities to be kept. Those records shall include:
(a)
for each credit rating decision, the identity of the rating analysts participating in the determination of the credit rating, the identity of the persons who have approved the credit rating, information as to whether the credit rating was solicited or unsolicited, and the date on which the credit rating action was taken;
(b)
the account records relating to fees received from any rated entity or related third party or any user of ratings;
(c)
the account records for each subscriber to the credit ratings or related services;
(d)
the records documenting the established procedures and methodologies used by the credit rating agency to determine credit ratings;
(e)
the internal records and files, including non-public information and work papers, used to form the basis of any credit rating decision taken;
(f)
credit analysis reports, credit assessment reports and private credit rating reports and internal records, including non-public information and work papers, used to form the basis of the opinions expressed in such reports;
(g)
records of the procedures and measures implemented by the credit rating agency to comply with this Regulation; and
(h)
copies of internal and external communications, including electronic communications, received and sent by the credit rating agency and its employees, that relate to credit rating activities.
8. Records and audit trails referred to in point 7 shall be kept at the premises of the registered credit rating agency for at least five years and be made available upon request to the competent authorities of the Member States concerned.
Where the registration of a credit rating agency is withdrawn, the records shall be kept for an additional term of at least three years.
9. Records which set out the respective rights and obligations of the credit rating agency and the rated entity or its related third parties under an agreement to provide credit rating services shall be retained for at least the duration of the relationship with that rated entity or its related third parties.