A compromise text on proposals amending the EU's rules on credit rating agencies agreed with the European Parliament was approved on 5 December by the Permanent Representatives Committee. This will enable the Cyprus Presidency of the EU Council to confirm the agreement reached with the Parliament and allow for adoption of the legislation at first reading.

The Permanent Representatives Committee approved the compromise text agreed with the European Parliament on 27 November on proposals amending the EU's rules on credit rating agencies. Presidency of the Council announced the starting of negotiations with the EP on new credit rating agencies rules in May 2012. These proposals include a draft directive that amends current directives on undertakings of collective investment in transferable securities (UCITS) and on alternative investment funds managers (AIFM) in order to reduce these funds' reliance on external credit ratings when assessing the creditworthiness of their assets.

Also, a draft regulation introduces a mandatory rotation rule forcing issuers of structured finance products with underlying re-securitised assets who pay CRAs for their ratings ("issuer pays model") to switch to a different agency every four years. An outgoing CRA would not be allowed to rate re-securitised products of the same issuer for a period equal to the duration of the expired contract, though not exceeding four years.

The draft regulation also requires issuers to engage at least two different CRAs for the rating of structured finance instruments, due to the complexity of structured finance instruments and their role in contributing to the financial crisis. To mitigate the risk of conflicts of interest, the proposal would require CRAs to disclose publicly if a shareholder with 5% or more of the capital or voting rights holds 5% or more of a rated entity, and would prohibit a shareholder of a CRA with 10% or more of the capital or voting rights from holding 10% or more of a rated entity. Moreover, sovereign ratings would have to be reviewed at least every six months (rather than every 12 months as currently applicable under general rules). The draft regulation also calls on the European Commission to prepare a report by 1 July 2016, reviewing the situation in the credit rating market, and if necessary to follow it up with appropriate legislative proposals on some of the new provisions.