The European Parliament has approved tougher regulation on credit rating agencies by making country ratings more transparent and introducing limited liability.

Parliament voted in favor of the legislation Wednesday in Strasbourg in a bid to improve the stability of financial markets.

Under the new rules, the agencies will have to set up a fixed publication calendar and will then be limited to three assessments per year for unsolicited sovereign ratings. They will also have to disclose more information about their decisions' underlying facts.

The rules also aim at ensuring that an agency can be held liable in case it infringes regulation intentionally or with gross negligence, thereby causing damage to an investor.

The rules are expected to take effect after a rubber-stamp approval by member states in the coming months.