Fri. Dec 4th, 2020

Planet Compliance

Innovation & Regulation in Finance

ESMA consults on the validation and review of CRAs’ methodologies guidelines

2 min read

The European Securities and Markets Authority (ESMA) has published a Consultation Paper on guidelines on the validation and review of Credit Rating Agencies’ (CRAs) methodologies (the CP).

The purpose of the draft guidelines is to clarify ESMA’s expectations regarding how CRAs should validate and review their methodologies. ESMA aims to achieve a consistent application of validation and review measures across CRAs through the demonstration of the discriminatory power, predictive power and historical robustness of their methodologies. The draft guidelines also identify the measures that CRAs should implement when validating and reviewing their methodologies with limited quantitative evidence.


The CP is accompanied by a Feedback Statement which outlines the main issues that were highlighted in response to the Discussion Paper on these guidelines published in December 2015. The initial proposals have not been substantially altered and this consultation focuses on the changes that have been made in response to the feedback received.

ESMA is seeking feedback from users of credit ratings and CRAs. The consultation closes on 22 August 2016.

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