The European Securities and Markets Authority (ESMA), the supervisor of European Union (EU) credit rating agencies (CRAs), has withdrawn the registrations of CRAs based in the United Kingdom (UK). ESMA’s decisions follow the end of the transition period of the UK’s withdrawal from the EU, which occurred on December 31, 2020. UK credit ratings will need to be endorsed for EU use.
The CRA Regulation requires ESMA to withdraw the registration of a firm where it no longer meets the conditions under which it was registered, including being a legal person established in the EU.
AM Best Europe-Rating Services Ltd, DBRS Ratings Ltd, Fitch Ratings Ltd, Fitch Ratings CIS Ltd, Moody’s Investors Service Ltd, and The Economist Intelligence Unit Ltd are no longer on ESMA’s list of CRA authorisation.
The ratings issued by the above mentioned CRAs cannot be used for regulatory purposes in the EU unless endorsed by an EU CRA. ESMA, in a previous communication on October 27, 2020, confirmed that all UK-based CRAs except the Economist Intelligence Unit Ltd took steps to ensure that an EU CRA is willing and able to endorse its credit ratings.