European Securities and Markets Authority Publishes Report on Credit Rating Agency and Trade Repository Fees

The European Securities and Markets Authority has published a thematic report on the fees charged by EU credit rating agencies and trade repositories for their services. Under the Credit Ratings Agencies Regulation, CRAs must ensure that fees for their services are non-discriminatory and based on actual costs. Under the European Markets Infrastructure Regulation, trade repositories must provide non-discriminatory access to their services and publically disclose their fees, which should be cost-related. ESMA directly supervises both CRAs and trade repositories that are established in the EU. ESMA’s investigation of the issue was prompted by concerns that ESMA had insufficient information to review whether such entities were complying with their fee-related regulatory obligations and by the receipt of market information that prompted questions around the non-discrimination and cost-based principles applicable to the fees charged by such entities.
 
ESMA’s report highlights three key areas of concern across both the credit rating and trade repository industries:
 

• Transparency and disclosure: CRAs and trade repositories should improve the information provided to clients and ESMA in respect of fees; this includes requiring CRAs to assist clients’ understanding of fee schedules and price increases or decreases and requiring trade repositories to provide simpler and more comparable fee schedules;
• Fee-setting process: CRAs and trade repositories should ensure that cost is a key pricing factor and that they comply with adequate controls to ensure they are meeting their regulatory objectives; and
• Interaction with related entities: where credit rating agencies and trade repositories engage their broader group in the provision of services, they should ensure that these interactions do not conflict with the principles of non-discrimination and cost-related fees.

 
The report sets out the steps ESMA intends to take to address these concerns, which include continuing to engage with market participants to ensure effective supervision of fee provisions and considering options to enhance clarity in certain areas, including the costs of services, comparability of trade repositories’ fee schedules and right to use the credit rating information produced by CRAs.
 
View ESMA's Thematic Report.
 
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