In July 2015 modeFinance was registered and received authorization from the European Securities Market Authority ('ESMA') under the Article 16 of the CRA regulation (link to the news).
In October 2016, modeFinance extended the registration even for credit institutions (banks).
We are the first European Fintech Rating Agency: thanks to its three-expertise souls (Fintech area, Information Technology area, Credit Rating Analysis area) modefinance produces integrated web- and cloud-based systems, which combines the most modern Big Data and Artificial Intelligence technologies, such as Neural Network Machine Learning models, Fuzzy Login and Genetic Algorythms.
With such Registration, modeFinance is allowed to issue corporate credit ratings of non-financial corporations, public and/or distributed via subscription on a subscriber-pays model (the ratings are paid by the subscribers and not by the rated entities). The Registration was approved by ESMA upon an intensive period of requirement examinations such as transparency, governance and avoidance of conflicts of interest; in order to comply with such requirements, modeFinance adopted and implemented strict and rigorous internal policies and procedures.
modeFinance produces autonomously procedures, criteria and models that are the foundations of the credit rating process. Corporate ratings issued by modeFinance are the result of two methodologies: the first, purely quantitative, is the “MORE” Methodology, widely tested during scoring activity; the second methodology implies the intervention of modeFinance team of rating analysts, which is responsible for the activity of issuance and credit rating monitoring.
The ratings are issued on a scale of 21 classes identified by an alphanumeric code which range from A1 (highest creditworthiness) to C3 (lowest creditworthiness), apart from classes reserved to companies which defaulted or which are under bankruptcy procedures.
Why do you need a rating? Credit rating agencies as modeFinance play an important role in providing one source of information that aids market efficiency by reducing information costs, increasing the pool of potential borrowers, and reducing the imbalance of information that often exists between buyers and sellers of bonds.