Credit Rating Agency UK Market
Share Report for 2022
November 2023
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Contents
1. Executive Summary 3
2. Regulatory Requirements for Issuers 4
3. Aim of this Report in Promoting Competition 5
4. Method of Market Share Calculation 6
5. UK Market Share by CRA 7
6. Sector Type by CRA 9
7. Our Approach to Competition and Wholesale
Data Market Study 10
3
Chapter 1
Executive Summary
1.1 This 2022 Market Share Report (the Report) for UK registered credit rating agencies
(CRAs) follows the inaugural report published last year. We supervise UK CRAs in
accordance with Regulation (EC) No 1060/2009 of the European Parliament and of the
Council of 16September 2009 on credit rating agencies as amended by SI 2 2019/266
the Credit Rating Agencies (Amendment etc.) (EU Exit) Regulations 2019 (collectively
called the ‘CRA Regulation’).
1.2 One of the aims of the CRA Regulation is to increase competition among credit
rating agencies by encouraging the use of smaller credit rating agencies through the
application of Article 8d.
1.3 Article 8d(1) states that where issuers or related third parties intend to use 2 or more
CRAs, they should consider appointing one of these CRAs that has no more than 10%
of total market share. Where an issuer or related third party does not do this, they should
document that decision. To facilitate this evaluation by issuers, or related third parties,
the FCA is required to publish annually the list of UK registered CRAs, their total market
share and the rating sectors in which they are active (Article 8d(2) of the CRA Regulation).
1.4 In summary, 3 credit rating agencies represent 90% of the total market, a slight decline
from the previous year (92%). The number of registered CRAs remain the same with 9
registered CRAs, 6 of which are below the 10% level. These market share calculations
are based on turnover figures reported by each CRA.
1.5 Given the intent of Article 8d to promote competition, we also address our competition
objective and Approach to Competition in this report.
4
Chapter 2
Regulatory Requirements for Issuers
2.1 To encourage the use of smaller credit rating agencies, Article 8d(1) of the CRA
Regulation requires issuers or related third parties intending to appoint at least 2 CRAs to
consider appointing at least 1 CRA with no more than 10% of total market share. Where
the issuer does not appoint a smaller CRA, it is required to document this decision.
2.2 As part of our supervision of the CRA Regulation and Article 8d, we engage with the
market to understand how effectively this article is promoting competition among
CRAs. We remind issuers of their regulatory obligation under Article 8d(1) to consider
the use of a smaller CRA and to document their decision for rating agency selection.
We may engage with issuers or related third parties, such as advisors and arrangers,
to understand the nature of their ‘consideration’ of a smaller CRA and how they are
evidencing their selection decision. Issuers are responsible for ensuring that they
understand the CRA Regulation and comply with it.
5
Chapter 3
Aim of this Report in Promoting
Competition
3.1 To help market participants in the ongoing identification of individual CRA market share,
we publish this Report annually and include the list of registered credit rating agencies
and their total market share. We also publish coverage of CRAs by sector, such as non-
financial corporate, financial institutions, insurance, sovereign and public finance and
structured finance.
3.2 We want issuers to use this Report as a starting point for their consideration when
appointing 2 or more CRAs and meeting their obligation in Article 8d. Users of credit
ratings also have a role to play in promoting competition by considering the full list of
credit rating agencies. UK firms using ratings for regulatory use in the UK, such as credit
ratings in calculating their capital requirements, can use ratings from any CRA provided
that the rating is issued or endorsed by a UK registered or certifiedCRA. For the current
FCA registered and certified firms, please refer to the Financial Services Register.
6
Chapter 4
Method of Market Share Calculation
4.1 The Report calculates total market share as total annual turnover generated from
credit rating activities and ancillary services, at the UK group level. The calculation is
based on the calendar year end 2022 turnover each CRA submits in their periodic fee
notification to us.
4.2 The CRA Regulation defines credit rating activities as ‘an opinion regarding the
creditworthiness of an entity, a debt or financial obligation, debt security, preferred share
or other financial instrument, or of an issuer of such a debt or financial obligation, debt
security, preferred share or other financial instrument, issued using an established and
defined ranking system of rating categories.’ (Article 3 (1) of the CRA Regulation). It defines
ancillary services as ‘…not part of credit rating activities; they comprise market forecasts,
estimates of economic trends, pricing analysis and other general data analysis as well as
related distribution services (Annex 1, part B, paragraph 4 of the CRA Regulation).
7
Chapter 5
UK Market Share by CRA
5.1 Table 1 below lists the 9 UK-registered CRAs, in order of decreasing market share. We
state their business model, market share percentage and direction of change from last
year. For ease, we include a final column indicating whether the CRA has no more than
10% of total market share.
5.2 Based on our analysis, we looked at concentration in the CRA market using the
Herfindahl–Hirschman Index (HHI); a commonly accepted measure of market
concentration. The HHI is calculated by squaring the market share of each firm in the
market and then summing the resulting numbers. This method considers the relative size
distribution of the firms in a market. Markets in which the HHI is between 1,500 and 2,500
are considered moderately concentrated while HHI in excess of 2,500 would be highly
concentrated. The UK CRA market has a HHI score of 2,779 a slight improvement from
2,887 last year but still reflects a highly concentrated market. The reduction in the HHI for
2022, as well as the year-on-year changes shown in Table 1 below shows a greater market
share being held by smaller CRAs (10%), than that shown in the same table for 2021 (8%).
Table 1: UK Market Share by CRA – Calendar Year end 2022
CRA UK Entity Name
Business
Model
Percentage
(2021)
Percentage
(2022) YOY Change
10%
or less
market
share
S&P Global Ratings UK
Limited
Issuer-pay 34.81% 34.71%
Moody’s Investors
Service Limited
Issuer-pay 30.42% 30.82%
Fitch Ratings Ltd Issuer-pay 27.03% 24.49%
DBRS Ratings Limited Issuer-pay 3.77% 3.67% Yes
The Economist
Intelligence Unit
Limited
Investor-
pay
1.38% 2.34% Yes
A.M. Best Europe
– Rating Services
Limited
Issuer-pay 1.47% 2.14% Yes
Kroll Bond Rating
Agency UK Limited
Issuer-pay 0.59% 0.85% Yes
8
CRA UK Entity Name
Business
Model
Percentage
(2021)
Percentage
(2022) YOY Change
10%
or less
market
share
Scope Ratings UK Ltd Issuer-pay 0.24% 0.58% Yes
ARC Ratings (UK)
Limited
Issuer-pay 0.29% 0.40% Yes
Gra nd Total 100.00% 100.00%
Source: Calendar year end 2022 turnover reported by each CRA in their periodic fee notification.
5.3 To note as part of the above table:
• As of the publication of this report, all nine firms are fully registered by the FCA.
• Fitch Ratings Ltd includes turnover from Fitch CIS which was deregistered on 30
June 2022 pursuant to this entity having ceased rating operations.
• Given The Economist Intelligence Unit Limited investor pay business model, credit
rating activity is defined as Country Risk Service (CRS) subscription turnover.
9
Chapter 6
Sector Type by CRA
6.1 Table 2 highlights in grey, the sectors in which each CRA has UK-issued or UK-endorsed
ratings. Rating sectors are classified as follows: non-financial corporate, financial
institution, insurance, sovereign and public finance, and structured finance. This table is
based on rating data reported by each CRA to the FCA supervisory database (RADAT).
Table 2: Sector Type by CRA
CRA UK
Entity
Name
10%
or less
market
share
Non-
Financial
Corporate
Financial
Institution Insurance
Sovereign
and Public
Finance
Structured
Finance
S&P Global
Ratings UK
Limited
Moody’s
Investors
Service
Limited
Fitch
Ratings Ltd
DBRS
Ratings
Limited
Yes
The
Economist
Intelligence
Unit Limited
Yes
A.M. Best
Europe
– Rating
Services
Limited
Yes
Kroll Bond
Rating
Agency UK
Limited
Yes
Scope
Ratings UK
Ltd
Yes
ARC Ratings
(UK) Limited
Yes
Source: Rating data reported by each CRA as of 31December 2022, in order of decreasing market share.
10
Chapter 7
Our Approach to Competition and
Wholesale Data Market Study
7.1 As Article 8d aims to promote competition in the CRA market, we take this opportunity
to refer to our competition objective. We have a range of tools we can use to protect
and promote competition. These include powers to undertake market studies and make
market investigation references to the Competition Markets Authority, as well as to
enforce the prohibitions in the Competition Act 1998 on anticompetitive agreements
and concerted practices, and on abuse of a dominant position.
7.2 On 2March 2023, we launched a market study following persistent user concerns
about how well wholesale data markets are working. One of the key areas of focus is on
competition in the provision of credit ratings data. On 31 August 2023, we published an
update report on the market study.
7.3 Based on our work to date, we propose not to refer any of the markets in scope of
the study to the CMA at this stage. While we believe there are reasonable grounds to
suspect there are features of each of the relevant markets that prevent, restrict, or
distort competition in the UK, our provisional view is that it is most appropriate for us
to take forward further work to identify and address potential harm caused by these
features ourselves.
7.4 In the remainder of the market study, we plan to extend and develop our analysis of
the information we have collected. Our market study report will include our findings on
competition in these markets and our decision whether to make an MIR, an explanation
of our decision and other actions to address the issues identified. We will publish this
report by 1March 2024.
7.5 Credit ratings are overwhelmingly paid for by debt-issuing firms, with the resulting
ratings given to CRAs’ data affiliates to license and distribute as part of data services.
The credit ratings data market is highly concentrated among data affiliates of the 3
largest CRAs: Moody’s Analytics, S&P Global Market Intelligence and Fitch Solutions.
Our analysis indicates that, among credit ratings data originators, data affiliates of the 3
largest CRAs account for a large majority of revenues from UK-domiciled end users.
7.6 As outlined in the update report on the market study, in response to our survey, data
users highlighted a perceived lack of transparency around how prices were set for credit
ratings data. Some users suggested they were paying significantly different prices to their
peers. Fees schedules are not typically publicly available. Data users were unclear about
pricing factors, and their respective weightings on end prices. Many larger firms said
regulatory and end investor requirements meant they had to license credit ratings data
from all of the 3 largest CRA’s data affiliates, with ratings from smaller CRAs not viewed
as a viable alternative. This limits many users’ choice of credit ratings data services.
This situation may allow CRA data affiliates to price discriminate in ways which can limit
competition, such as charging higher prices to firms who cannot switch service providers.
© Financial Conduct Authority 2023
12 Endeavour Square London E20 1JN
Telephone: +44 (0)20 7066 1000
Website: www.fca.org.uk
All rights reserved
Pub ref: 008119
