Financial services: Commission sets out its equivalence policy with non-EU countries

Dombrovskis 19

European Union, 2019 Source: EC – Audiovisual Service

This article is brought to you in association with the European Commission.


The European Commission is today taking stock of its overall approach to equivalence in the area of financial services. EU equivalence has become a significant tool in recent years, fostering integration of global financial markets and cooperation with third-country authorities.

The EU assesses the overall policy context and to what extent the regulatory regimes of a given third country achieves the same outcomes as its own rules. A positive equivalence decision, which is a unilateral measure by the Commission, allows EU authorities to rely on third-country rules and supervision, allowing market participants from third countries who are active in the EU to comply with only one set of rules.

Today’s Communication also sets out how recent updates to EU legislation will ensure even greater effectiveness of the EU single rulebook, supervision and monitoring, while also fostering cross-border business in global markets. The Commission has to date taken over 280 equivalence decisions with regard to over 30 countries. 

Valdis Dombrovskis, Vice-President for Euro and Social Dialogue, also in charge of Financial Stability, Financial Services, and Capital Markets Union said: ”Equivalence is one of our main tools to engage with third countries in financial servicesIt’s mutually beneficial because it enables us to have a robust cooperation with our partners and to open up our markets to non-EU market players and vice-versa. Our equivalence policy has proven effective so far, and we now have even better rules in place to meet our objectives of preserving financial stability while promoting international integration of EU financial markets.

This Communication sets out the EU’s comprehensive approach and recent legislative improvements in terms of how the Commission grants equivalence to non-EU countries. It also describes how the Commission and the European Supervisory Authorities (ESAs) monitor the situation in those countries after equivalence decisions have been taken, to ensure that these continue to fulfil EU objectives and preserve financial stability, investor protection, market integrity and a level playing field in the EU. 

This Commission document also provides an overview of how recent EU legislative changes have strengthened the equivalence framework, both in terms of initial assessments and ex-post monitoring, in particular with an increased role for the European Supervisory Authorities. These recent legislative changes, for instance in the amended ESAs regulations, strengthen the roles of those authorities in monitoring equivalent third countries.

Recent equivalence decisions 

In line with its commitments to foster transparency towards stakeholders, the Commission takes the opportunity of the publication of this Communication to present its recent EU equivalence decisions. 

The Commission has today adopted equivalence decisions for financial benchmarks administered in Australia and Singapore. These decisions recognise that the administrators of certain interest rates and foreign exchange benchmarks in Australia and Singapore are subject to legally binding requirements which are equivalent to the EU requirements set out under Regulation (EU) 2016/1011 (The Benchmark Regulation). 

Separately, the Commission has extended existing equivalence decisions in the field of Credit Rating Agencies for Hong-Kong, Japan, Mexico and the United States. At the same time, the Commission has for the first time repealed existing decisions for Argentina, Australia, Brazil, Canada, and Singapore, as these jurisdictions could no longer meet the standards set by the EU Credit Rating Agencies after its amendment in 2013. The countries decided, after discussions with the Commission, not to implement the necessary legislative adjustments given the limited scale of activity to be covered.

Background

In February 2017, the Commission services published a Staff Working Document, which provided a first comprehensive assessment of equivalence in financial services. That document described the Commission’s approach to assessing third-country frameworks and outlined the main objectives pursued by the Commission.

Equivalence decisions allow the Commission to recognise that the financial regulatory or supervisory regime of certain non-EU countries is equivalent to the corresponding EU framework. The Commission may declare a third country equivalent when the third country’s regulatory and supervisory framework delivers equivalent outcomes as compared to the relevant EU framework. Equivalence is a regulatory instrument, typically an implementing act which aims to deliver prudential benefits to market participants and to preserve the EU financial stability, market integrity, investor protection, and a level-playing field in the EU single market. 

The equivalence decision making is preceded by an in-depth assessment by the Commission, based on a dialogue with the third country authorities concerned and involving, where relevant, the European Supervisory Authorities. The assessment is based on the principles of proportionality and is risk-sensitive, i.e. the Commission will look more in detail at a third-country framework, and will expect stronger safeguards against risks when that third country’s impact on the EU markets is high.

 EU financial services law includes around 40 areas for equivalence decisions.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

EU budget: Stepping up the EU’s role as a security and defence provider

Statement by President von der Leyen on recent developments related to Iran and Iraq

The energy industry is changing. Are governments switched on?

Myanmar military leaders must face genocide charges – UN report

The MH17 tragedy to put a tombstone on Ukrainian civil war

Climate change and health: Raising awareness is the key for greener actions

We have a space debris problem. Here’s how to solve it

The US reject EU proposal for prudential financial controls

The EU has to prove it can remain one piece

Will Merkel ever steer the EU migration Titanic and restore her power in Germany?

The EU Commission openly repudiates the austere economic policies

Drones, disinfectant, distancing – Europe’s beaches open up

Unemployment worries spike around the world as coronavirus remains top global concern

The European Commission cuts roaming charges. But “it’s not enough”…

Post the pandemic: keeping our worlds turning

These rules could save humanity from the threat of rogue AI

Unemployment is down across the world’s largest economies

COVID-19: EU co-finances the delivery of more protective equipment to China

Global leaders and companies pledge to reduce the gender pay gap by 2030

Climate change: new rules agreed to determine which investments are green

The EU’s Response to COVID-19

Dangers of poor quality health care revealed ‘in all countries’: WHO report

Mergers: Commission opens in-depth investigation into joint ventures proposed by Boeing and Embraer

4 things ISPs can do to reduce the impact of cybercrime

Implementation of EU Facility for Refugees in Turkey: EU mobilises €663 million in humanitarian assistance

Palestine refugee crisis ‘expanding’; leaving highest number at risk this century across Gaza

European Commission requests that Italy presents a revised draft budgetary plan for 2019

ECB’s new money bonanza handed out to help the real economy or create new bubbles?

From ‘dead on the inside’ to ‘truly alive’: Survivor of genocide against the Tutsi in Rwanda recounts her story as UN marks 25th anniversary

On Youth Participation: Are we active citizens?

Huge data gaps’ hampering ‘evidence-based’ national migration policies

COP24: A million lives could be saved by 2050 through climate action, UN health agency reveals

EU-U.S. Privacy Shield: Second review shows improvements but a permanent Ombudsperson should be nominated by 28 February 2019

EU Commission indifferent on Court of Auditors’ recommendations

First-ever global conference of national counter-terrorism chiefs will strengthen cooperation, build ‘resilient’ States, says top UN official

COVID-19 tracing apps: MEPs stress the need to preserve citizens’ privacy

Almost there: Equal healthcare for LGBTQI+

Palestine refugees’ relief chief warns Security Council money to fund Gaza operations will run out in mid-June

We must learn and change after Haiti sexual abuse scandal -Oxfam chief

Online radio and news broadcasts: Parliament and Council reach deal

Health is nothing but the main consequence of climate change

Marco Polo’s Dream

Rural Bangladesh has already embraced renewable energy. Here’s what the rest of the world can learn

Europe plans to send satellites into space to monitor CO2 emissions

US now has most coronavirus cases in the world – Today’s coronavirus updates

UN chief lauds Fijians as ‘natural global leaders’ on climate, environment, hails ‘symbiotic relationship’ with land and sea

The 28 EU leaders care more about fiscal orthodoxy than effectively fighting youth unemployment

Lagarde: Keep feeding the banks cut down wages and food subsidies

Recognizing, protecting and empowering youth rights in Europe and the world

Should Europe be afraid of the developing world?

Most fish consumers support a ban on fishing endangered species, poll finds

New rules allow EU consumers to defend their rights collectively

The Great Reset needs great leaders to help the most vulnerable

A bad marriage can be as unhealthy as smoking and drinking

EU job-search aid worth €9.9 million for 1,858 former Air France workers

From Model T to EV: a short history of motor vehicle manufacturing

African elephants under continued threat of poaching, warns UN-backed report

This Dutch company has devised an innovative way to deal with food waste

Quicker freezing and confiscation of criminal assets in the EU

Euro celebrates its 20th birthday

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s