German funds ask EU to force ratings agencies to open up on fees
08 September, 2020
German investment funds and insurers have called on europe to force credit rating agencies to supply more transparency on the charges they charge for data.
US-based agencies Moody's, S&P Global and Fitch Ratings, dubbed the Big Three, dominate credit scores in Europe.
German funds association BVI and insurance industry body GDV said these were making a joint appeal to the EU's executive European Commission to force raters to provide more transparency on prices.
"The major US rating agencies are exploiting their dominant market position to create their pricing, but the EU securities authority ESMA lacks the regulatory tools to bring such abusive licence and cost demands to an end," Thomas Richter, chief executive of BVI, said in a statement on Monday.
Fund managers and insurers need ratings data for deciding risks from investment portfolios, and for complying with accounting and regulatory reporting rules.
All data providers within the same rating group should be subject to the EU's rules for raters, which happens to be not the case, BVI and GDV said.
The Fitch Group said it generally does not assume that a change in the guidelines in this regard is merited. Moody's and S&P had no immediate comment.
Certain subscribers of ratings have chosen to get bespoke ratings data from distributor Fitch Solutions, which is independent of the Fitch Ratings arm, on conditions it deems commercially reasonable, Fitch Group said.
The cost of data was becoming an increasingly important "competitive" factor for European asset managers, the German funds and insurer bodies said.
Investment funds already are pressing Brussels to force stock exchanges to cut the price tag on data service fees on stock transactions.
European policymakers have long chafed at U.S. rating agencies dominating the spot but attempts to create major "home grown" alternatives have made only modest headway.
Source: www.thenational.ae