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EU watchdog studies Brexit risks at rating agencies

LONDON (Reuters) - The European Union's securities watchdog has asked credit rating agencies and bodies that record derivatives trades to show how they would avoid disrupting markets when Britain leaves the bloc.

The European Securities and Markets Authority (ESMA) directly regulates up to 30 credit rating agencies (CRAs) like Moody's and Standard & Poor's in the EU, as well as six trade repositories (TRs) which track derivatives transactions.

Several rating agencies and repositories are based in London from where they serve customers across the bloc, raising questions about continuity of service with Britain set to leave the EU in 2019.

ESMA said in its annual supervision plan on Friday that its work will include an assessment of the "potential implications" of Brexit on the watchdog's objective of enhancing investor protection and promoting stable and orderly financial markets.

"ESMA has also started engaging with CRAs and TRs that may be affected by the outcome of the referendum to understand the preparations these entities are making," ESMA said.

(Reporting by Huw Jones; Editing by Keith Weir)

 

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