Europe’s Markets Watchdog Wants a Much Narrower Sovereign Rating Release Time

Europe's markets watchdog wants a much narrower sovereign rating release time

Europe’s market watchdog European Securities and Markets Authority (ESMA) has advised its credit rating agencies of publishing its European sovereign ratings reports in a much more narrower window, between 9 pm and 11 pm on Friday London time.

The idea, the organization said, is to develop a ‘more level playing field’ for the rating agencies.

Under the purview of the European Union regulations, several rating agencies that include stalwarts such as S&P Global, Fitch, Moody’s and DBRS have taken into consideration a more systematic matrix for reviewing dates of any country rated by an analyst based in Europe.  ESMA, the organization that keeps a check on the functioning of agencies, already mandated the publication to be on Friday evenings, after markets in the regions closed.

Although initially, it tended to create some disparities as S&P published most of its reviews between 5-6 pm London time (currently 1600-1700 GMT), whereas the other main agencies tend to publish theirs later.

However, such a market structure has generated certain shortcomings. US trading is still in full flow fabricating certain futures and derivatives that can move on rating changes even though they are changing hands, potentially demeaning the position of certain European-based investors.

The source said no formal notification has been laid down but the agencies were made aware of the planned move of the ESMA.

However, ESMA refused to make an official statement on the said propositions.

Despite ESMA vehemently pursuing for the changes last week, some European reviews were still published just after Europe’s main markets closed on Friday. The trend though, is expected to change in the not too distant future.

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