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I would like to inform you of the Dutch position on the two recent
consultation documents pertaining to Credit Rating Agencies (CRAs). 

I appreciate your proposal to improve regulation on CRAs and in
particular welcome those measures that aim at preventing conflicts of
interest and increasing transparency. As you might know, the Netherlands
emphasise the better regulation principles and working from a clear
evidence base. Unfortunately, in this case a thorough regulatory impact
assessment was lacking which makes it difficult for us to judge the
proposal. In my view, it is desirable that a full quantitative and
qualitative cost-benefit analysis is undertaken before presenting a
final proposal. More generally, we should avoid rushing headlong into
new legislation and setting up a supervisory structure that affects both
the industry and the economy as a whole for a long time to come. In the
current situation, ensuring quality should take precedence over meeting
a self-imposed deadline.

I also note that the proposed approach risks creating duplication with
existing legislation and supervision. In this regard, it might be good
to clarify in what areas the proposed legislation deviates from e.g. the
IOSCO-Code, CEBS-guidelines and US-legislation. Regarding the proposed
supervision structure, it seems necessary to further work out the two
proposed options. In addition, in our view a third option of
centralising authorisation and supervision in CESR/ CEBS should be
analysed. Although I recognise that fully concentrating authorisation
and supervision of CRAs at the European level might be ambitious at this
point in time, it would still be preferable to include this option in
the discussion. While it might in the end turn out not to be desirable
at this moment, it could still be a supervision structure that would
make sense in the future and hereby affect the decision between the two
proposed options. 

While these issues are of particular concern, I understand that there
already has been extensive communication with DG Market on the proposed
legislation. Commissioner Kroes has been informed of our specific
concerns pertaining to competition and entry into the CRA market. I
trust that these comments will contribute to further improving the draft
regulation. 

In conclusion, I would like to express my support for finding the most
efficient and effective way to improve regulation of the credit rating
market in order to remove one of the several root causes behind the
financial crisis. I would be most grateful if the Commission could add a
comprehensive impact assessment and a cost-benefit analysis of the
proposal, which can only enhance the quality of discussion and may in
the end contribute to a speedy positive conclusion. I remain at your
disposal for further information and cooperation.

Yours sincerely,

Wouter Bos

Minister of Finance of the Netherlands

Encl.	1. Letter to Commissioner Kroes

	 PAGE  2  /  NUMPAGES \* ARABIC \* MERGEFORMAT  2 

Mr. Charlie McCreevy

European Commissioner for Internal Market and Services

European Commission

B-1049 Brussels

Belgium

Copy to: DG Market, Unit F2

European Commission

B-1049 Brussels 

Belgium



Directie Financiële Markten



Datum

Uw brief (Kenmerk)

Ons kenmerk

10 oktober 2008



FM/2008/2201 M

Onderwerp

Comments of the Netherlands on CRA's







Dear Mr. McCreevy,