European Business Law Review

Volume 27 (2016)

Volume 27 (2016) / Issue 3

Francesco De Pascalis, 'Investors’ and Market Particiants’ Over-Reliance on External Credit Ratings: To What Extent Does EU Law Carry This Risk?' (2016) 27 European Business Law Review, Issue 3, pp. 353–375


The risk of over-reliance on external credit ratings by investors and market participants was highlighted in the context of the recent post-crisis credit rating agencies’ reforms. This problem stems from the inclusion of credit ratings into legislation. Accordingly, regulators agreed upon an approach based on a review of the credit rating references found in legislation and regulatory frameworks. At the EU level, this approach has been set out in the European regulation of CRAs. This paper aims to investigate the hardwiring of credit ratings into the EU’s financial legislation in order to assess the extent to which this poses a significant risk of over-reliance. The present analysis relies on the outcomes of the recent joint report that the European supervisory authorities has issued with regard to the risk of over-reliance on credit ratings in their own recommendations, guidelines and draft technical standards. These can form the platform for a wider discussion on the degree of importance that European regulators gave to credit ratings in legislation and regulatory frameworks.

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ISSN: 0959-6941
ID: EULR2016016