Under regulation 44 of the CRAR SI the FCA has 20 working days to determine whether the notification for conversion of certification meets the requirements to be converted or inform the firm of the steps that need to be taken and the time within they need to be taken for the notification to be considered valid.
The FCA cannot guarantee that notifications submitted after this time, or incomplete notifications, will be processed by exit day. We have published a direction for CRAs wishing to make advance applications to the FCA.
CRAs issue credit ratings which are opinions on the creditworthiness of an issuer or security.
Firms may use credit ratings in the calculation of their capital requirements and for assessing risks in investment activity.
Under regulation 38 of the CRAR SI the FCA has 20 working days to determine whether the notification for conversion of registration meets the requirements to be converted or inform the firm of the steps that need to be taken and the time within which they need to be taken for the notification to be considered valid.
In order to give sufficient time for these notifications to be processed, firms should aim to submit their completed notifications, together with all supporting documentation, by midnight on 2 October 2019 in order to help ensure the continued regulatory use of their ratings in the UK after exit day.
The authors' names are listed alphabetically to indicate equal contribution.
For comments on previous versions of this article, we are grateful to Matthias Kaelberer, Sebastian Saiegh, Tim Sinclair, Mike Tomz, Paul Vaaler, Jeff Wooldridge, as well as panelists and participants of the ISA 2006.
To support a smooth transition to the new regime for CRAs in the UK, and minimise disruption to the users of credit ratings, the Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019 (CRAR SI) prescribes several transitional processes for existing CRAs.
The CRAR SI introduces both a conversion and temporary registration regime available to CRAs wishing to issue ratings in the UK on or after exit day: For firms not making use of the above transitional processes, applications to register as a new CRA will be assessed in accordance with the usual procedures in the CRA Regulation, as brought into UK law under the EUWA.