SFC welcomes ESMA recognition of Hong Kong regulation of credit rating agencies

The Securities and Futures Commission (SFC) welcomes the announcement by the European Securities and Markets Authority (ESMA) that it considers the regulation of credit rating agencies (CRAs) in Hong Kong to be in line with their regulation in the European Union (Notes 1 and 2).

The decision by ESMA allows European financial institutions to continue using, for regulatory purposes, credit ratings that have been prepared in Hong Kong. European CRAs will also be permitted to endorse credit ratings issued by CRAs licensed in Hong Kong.

In the interest of enhanced supervision of CRAs internationally, the SFC has entered into formal cooperative arrangements with ESMA, which provide for various forms of cooperation, including ongoing consultation and the exchange of information.

“This announcement by ESMA reflects a convergence in the regulatory standards and obligations that are imposed on CRAs in the European Union and Hong Kong, as well as in other jurisdictions, and is a significant development from an international regulatory perspective,” said Mrs Alexa Lam, the SFC’s Acting Chief Executive Officer.

“This decision by ESMA is pleasing because it is further recognition of the international standing of Hong Kong’s regulatory environment and it will give reassurance to credit rating agencies that the presence of their Asian operations in Hong Kong provides them with critically important access to the European Union,” she added.

End

Notes:
1. ESMA is directly responsible for registration and supervision of CRAs in the European Union. For details of the announcement, please visit ESMA website: http://www.esma.europa.eu/.
2. The regulatory regime governing CRAs operating in Hong Kong became effective on 1 June 2011. Please see the SFC’s press release on 2 June 2011.