MOODYS CORP DE

MIS, certain of the Company's credit rating affiliates, and many of the issuers and/or securities that MIS and the affiliates rate, are subject to extensive regulation in the U.S. (including by state and local authorities), EU, U.K. and in other countries. In addition, some of the services offered by MA and its affiliates are subject to regulation in a number of countries. MA also derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight and who are required to conduct due diligence and pass through certain regulatory requirements to key suppliers such as MA by contract. Existing and proposed laws and regulations can impact the Company’s operations, products and the markets in which the Company operates. Additional laws and regulations have been proposed or are being considered. Each of the existing, adopted, proposed and potential laws and regulations can increase the costs and legal risk associated with the Company’s operations, including the issuance of credit ratings, and may negatively impact the Company’s profitability and ability to compete, or result in changes in the demand for the Company's products and services, in the manner in which the Company's products and services are utilized, and in the manner in which the Company operates.

In the U.S., CRAs are subject to extensive regulation primarily pursuant to Section 15E of the Exchange Act and rules thereunder. MIS is registered with the SEC as an NRSRO and is subject to the SEC's oversight and examination authority.

In the EU, the CRA industry is registered and supervised through a pan-EU regulatory framework. ESMA has direct supervisory responsibility for registered CRAs throughout the EU. MIS’s EU CRA subsidiaries are registered with and are subject to CRA regulation in the EU and periodic inspection by ESMA.

The European Parliament and the Council of the EU, the EU co-legislators, announced they had reached agreement on the text of the Regulation on ESG Ratings Activities in February 2024. The Regulation will become law after it has been published in the EU Official Journal. The regulation will apply after an 18 month implementation period from its publication, and will subject ESG rating and/or score providers to formal regulation and supervision by ESMA. Certain products offered by MIS may fall in scope of the Regulation and we continue to assess and prepare for the implications. We do not expect MA products to fall into scope.

The EU AI Act was published in the EU Official Journal in July 2024, though elements of the Act have different implementation periods. We continue to assess and prepare for any implications both for MA and MIS.

In December 2022, the EU adopted DORA, which will apply from early 2025. As a credit rating agency, MIS is in scope of DORA, and accordingly, is required to undertake certain steps to ensure that its oversight and risk management of its information technology, including any functions outsourced to third-parties that provide information communication technologies, is resilient. MA provides certain products and services to clients that may be regulated financial institutions in the EU and therefore fall in the scope of DORA. It is therefore expected that MA may receive queries from such clients in relation to those products and services, as well as requests for contractual commitments, to ensure their compliance with DORA.

In the U.K., MIS U.K. is registered with and regulated by the FCA. In March 2023, the FCA initiated a review of competition in the markets for certain types of wholesale market data, including credit ratings data. The review concluded at the end of February 2024. In its final report, the FCA declined to make a market investigation reference to the Competition and Markets Authority nor did it consider any specific remedies or other specific interventions in respect of credit ratings data.

Additionally, HM Treasury published a consultation in March 2023 on whether regulation for providers of ESG ratings should be introduced, and the potential scope of a regulatory regime. The U.K. Government has said it intends to take forward such legislation in 2025.