Cheat sheet: What is CRA 3?

20 February 2016


CRA 3 Key Issues

A credit rating agency (CRA) provides opinions on the creditworthiness of entities such as companies or governments and of debt instruments such as bonds. The biggest three CRAs are Standard & Poor’s, Moody’s and Fitch, which together cover approximately 95% of the world market. The second revision of the CRA Regulation (CRA3) reviews the EU’s regulatory framework for CRAs.

During the financial crisis, many ratings that CRAs had issued for structured financial products proved catastrophically wrong. The G20’s Financial Stability Board proposed a set of principles in 2010 to reduce reliance on external ratings, leading to regulatory action on CRAs around the world.

In April 2009, an EU Regulation was agreed that required CRAs to be registered and supervised at a European level. In 2010, the Commission proposed a review (CRD2) to move supervision to the new European Securities and Markets Authority (ESMA), extend the scope to hedge funds using ratings, reduce conflicts of interest and introduce sanctions for non-compliance.

The package agreed between the European legislators in November 2012 would:

  • reduce the reliance of fund managers and supervisors on external ratings,
  • control the frequency and timing of sovereign rating announcements,
  • make CRAs liable if they conduct gross negligence,
  • restrict cross-shareholdings of CRAs and entities being rated,
  • require mandatory rotation of CRAs for some products
  • publish ratings on a European Rating Platform to improve comparability and visibility of ratings


  • 16 January 2013 – Parliament plenary endorses November 2012 inter-institutional agreement
  • September-November 2012 – Negotiations between the European institutions
  • 24 August 2012 – European Parliament ECON Committee adopts negotiation position
  • 22 July 2012 – Finance Ministers agree negotiation position
  • 15 February 2012 –ECON Committee draft report presented by Leonardo Domenici (S&D, Italy)
  • 24 January 2012 – Public hearing in ECON Committee (Finance Watch gives evidence)
  • 15 November 2011 – Commission presents CRA3 review proposal


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