The Financial Times reported on Sunday that the European Commission would block five nations from getting access to its some of its market for not following as stringent criteria for its credit rating agencies as the Commission. These five nations include Singapore, Argentina, Australia, Canada and Brazil.
The move is said to be an alarming call for the Britain as it needs to adapt itself to the EU rules if it wants to continue the financial market access of EU nations. This is another flaw of the hard Brexit, for the UK needs to be extra careful and is required to strictly regulate its credit rating agencies.
This is for the first time that the commission has withdrawn access to such rights, also known as equivalence provisions. There are in total 40 equivalence provisions incorporated to ensure that the trading platforms, brokers, non-EU lenders, investment firms, clearing houses or credit rating agencies and other financial companies based out of the bloc are capable of serving EU clients authentically.
Valdis Dombrovskis, Vice President for financial regulations in European Commission told FT, that rating credit agencies was done to establish ‘some kind of a precedent for monitoring adherence’.
He said, “We had extensive dialogue with those countries, so they knew there was an issue and they knew there may be consequences. If they, during several years, chose not to update their legislation, then we had to take the decision to withdraw equivalence.”
Brussels emphasized that the rules are the same for all the non-EU nations and UK would be required to abide them as soon as it exits the bloc to gain access to the European single market.
UK former Prime Minister, Theresa May tried to reach an understanding with the Commission, granting Britain more comprehensive and permanent access to the regime but in vain.