EU to strip 5 countries, including Singapore, of some market access rights, says FT

[NEW YORK] The European Commission will deem that Canada, Brazil, Singapore, Argentina and Australia do not regulate credit ratings agencies with the same rigour as the EU, the Financial Times reports citing a document.

The decision would withdraw some market access rights of the countries, removing a status that makes it possible for European banks to rely on the ratings.

This will be the first time that the access rights have been withdrawn, though temporary permissions for Switzerland were allowed to lapse earlier.

According to FT, about 40 equivalence provisions are scattered throughout different EU financial regulations and are intended to make sure that trading platforms, brokers and other companies based in non-EU financial centres can serve European clients, so long as they are subject to strong regulation and supervision. The provisions are used by more than 30 countries.

Valdis Dombrovskis, the EU commission vice-president in charge of financial regulation, told the FT that the decision on rating agencies set "some kind of a precedent for monitoring adherence".

"We had extensive dialogue with those countries, so they knew there was an issue and they knew there may be consequences," he said.

"If they, during several years, chose not to update their legislation, then we had to take the decision to withdraw equivalence."

Head of European compliance at DBRS told the FT that the EC decision to repeal equivalence for Canada will have no impact on the agency's business.

BLOOMBERG