On 20 June 2016, the European Securities and Markets Authority (ESMA) published a memorandum of understanding (MoU) that it had entered into with the Financial Services Board of South Africa (SA FSB) relating to the supervision of cross-border credit rating agencies (CRAs).
ESMA has now announced that it considers the regulatory framework for CRAs of South Africa to be as stringent as EU rules. The decision allows a European CRA to endorse credit ratings issued by its South African subsidiary or parent company. Endorsed credit ratings may be used for regulatory purposes in the EU.
In order to facilitate the exchange of regulatory information, and as a precondition to endorsement, ESMA has also entered into a co-operation agreement for the supervision of CRAs with the SA FSB. The cooperation agreement recognises the cross-border activities of certain CRAs and the global nature of ratings generally and the importance of ongoing supervisory and enforcement-related cooperation in this area.
The MoU is effective from 30 June 2016.
View ESMA MoU with FSB of South Africa on Supervision of CRAs, 30 June 2016