Noose tightens on ratings agencies

The prospect of ratings agencies being subject to regulatory scrutiny was flagged up by the Larosiere report and has also been on the agenda of the UK's Treasury Select Committee enquiry into the banking crisis. Up to now, however, the proposals have been abit vague and have pointed to much of the detailed regulation being left to national regulators. The proposals put forward by the internal market commissioner, Charlie McCreevy, put the Euroepan Union firmly in the driving seat of that reform. Under the proposals which now go to the European Parliament next month, all ratings agencies will have register with the Committee of European Securities Regulators - itself earmarked for a greater role by Larosiere - or be subject to equivalent regulation if based outside the EU. Within the detail of the proposals is a requirement that all lead analysts should be rotated every five years.

This is yet another example of the EU pushing ahead in its determination to take control of the reform agenda.