On October 19, 2016, the European Commission published a report (COM(2016) 664 final) responding to reporting obligations set out in Regulation 1060/2009 (CRA Regulation).

The report:

• Analyzes references to external credit ratings in EU legislation and in private contracts among parties in financial markets.
• Assesses potential alternatives to external credit ratings that are currently used by market participants in the EU. The Commission is of the view that there are currently no feasible alternatives that could entirely replace external credit ratings.
• Evaluates the impact of the CRA Regulation on governance and internal procedures of CRAs, in particular the prevention of conflict of interests and the use of alternative remuneration models.
• Analyzes the provisions relating to structured finance instruments (SFIs) and their potential extension to other asset classes. The Commission does not think it is appropriate to extend CRA Regulation provisions to other financial products.
• Assesses the impact and effectiveness of the CRA Regulation’s measures concerning competition in the credit rating industry. Given some provisions are still in the process of implementation, the Commission will continue monitoring the development of the market before considering the adoption of further measures. More generally, the Commission will seek to avoid and further reduce regulatory barriers to market entry.
• Considers the feasibility of establishing a European CRA for the assessment of sovereign debt and a European credit rating foundation for all other credit ratings. The Commission considers there to be no need at present for a European CRA specialized in sovereign debt or for other credit ratings.