The European Securities and Markets Authority (ESMA) has announced this Friday that it has approved “Dagong Europe” as a new credit rating agency. The Chinese company has one of its headquarters based in Italy and will start to operate in Europe on June 13.
In an announcement made a few days ago, the European Securities and Markets Authority pointed out that once Dagong‘s registration is carried through, the company’s ratings can start to be used right away, but always according to the European legislation.
This means we’ll have another fish in the credit rating agencies‘ tank, which will probably act just as another player to go with the natural flow of the market and its lobbies and interests. There are currently 21 credit rating agencies, but only 2 of those are certified inside the European Union.
ESMA‘s reach is restricted to the European Union, with its main mission being the protection of investors, as well as reinforcing stable and well functioning financial markets. This organism oversees all the credit rating agencies that work inside the E.U. and has the power to impose sanctions anytime its rules and requirements aren’t followed.
The credit rating sector has been the target of many critics over the past years, with a large group of economics and politicians blaming them as the main responsible for several past economic and financial crises. These days, around 95% of the ratings business is controlled by only 3 big companies: Moody’s, S&P (Standard & Poor’s) and Fitch Ratings.