Parliamentary Replies
Published Date: 03 September 2019

Reply to Parliamentary Question on European Commission’s decision to repeal equivalence status for credit rating agencies in Singapore


NOTICE PAPER 1813 of 2019



Date: For Parliament Sitting on 3 September 2019

Name and Constituency of Member of Parliament

Mr Leon Perera, Non-Constituency Member of Parliament


To ask the Prime Minister whether there are plans to improve the regulation regime of credit rating agencies in Singapore to re-achieve equivalence status with the regulation regime of the European Union.

Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1.     Some media reports might have given the impression that the European Commission (EC) is reducing its market access to financial institutions in Singapore. This is not true. There continues to be no impediment, for financial services provided out of Singapore to customers in the European Union (EU).  There has also been no impact on investors’ confidence in Singapore.

2.     Let me explain. The EC’s decision covers only Credit Rating Agencies (CRAs) and does not extend to any other financial services. Further, the EC recognises CRAs in a third country through two approaches:

  • First, deeming the third country’s CRA rules as equivalent to EC rules. This is called the equivalence decision; 
  • Second, an endorsement approach, where the CRAs in the third country rely on their related entities in the EU to endorse their ratings. 

CRAs in Singapore have been using the endorsement approach, and the EC has confirmed that it will continue to recognise Singapore-based CRAs using this approach.    

3.     Having said that, equivalence is the highest form of market integration, which CRAs in Singapore, like those in several other jurisdictions, no longer enjoy. The reason has to do with the different approaches taken by major regulators internationally.

4.     On how MAS’ regulations on CRAs compare to those in the EU, MAS’ CRA regulatory regime is based on, and consistent with, standards promulgated by the International Organisation of Securities Commissions (IOSCO), which is the global standard setting body. The EC has assessed MAS’ CRA regulatory regime to be less prescriptive than EU rules in certain areas, such as in defining specific situations in which a conflict of interest for the CRA arises. MAS takes a more principles-based approach. It nevertheless requires conflicts of interest to be effectively addressed, and is fully in line with international standards and appropriate to our context and needs.    

5.     Singapore is in good standing with the EU. We have EC recognition on a broad range of other financial services, including for over-the-counter derivatives trading venues and central counterparties. In July 2019, we were one of the first two jurisdictions to obtain EC equivalence for financial benchmarks regulation. MAS will continue to closely engage our EU counterparts in reviewing our rules to ensure that financial institutions in Singapore continue to have access to the EU market in various financial services.

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