Financial services: EC sets out its equivalence policy with non-EU countries
The European Commission is 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. The 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 yesterday said:
”Equivalence is one of our main tools to engage with third countries in financial services. It'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 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.
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.
Staff Working Document of February 2017 on EU equivalence decisions in financial services policy: an assessment.
Latest News from
ECB shuts down compromised BIRD website16/08/2019 10:20:00
The European Central Bank (ECB) said on Thursday that unauthorised parties had breached the security measures protecting its Banks’ Integrated Reporting Dictionary (BIRD) website, which is hosted by an external provider. As a result, it was possible that the contact data (but not the passwords) of 481 subscribers to the BIRD newsletter may have been captured.
rescEU assets mobilised to help Greece fight devastating forest fires15/08/2019 10:25:00
Following a request for assistance from Greece on 13 August 2019, rescEU assets have been mobilised to tackle forest fires ravaging several areas of Greece.
EU mobilises €9m to tackle the food crisis in Haiti14/08/2019 10:20:00
The European Union has released €9m in humanitarian aid in response to the deteriorating food & nutrition situation in Haiti. The humanitarian aid will cover the basic food & nutritional needs of more than 130,000 people living in the worst affected areas.
Asylum applications in the EU+ up by 10 % in the first half of 2019 from the same period in 201813/08/2019 11:10:00
Preliminary analyses reveal that in the first half of 2019 some 337 200 applications for asylum were lodged in the EU+, a 10 % increase from the same period a year earlier. In contrast to this upward trend, in June 2019 applications fell to the lowest level of the year, but there were fewer working days.
EC provides 20 cities with funding for innovative security, digital, environmental and inclusion projects07/08/2019 15:20:00
The European Regional Development Fund (ERDF) will finance 20 urban projects with €82m. These projects were put forward by cities under the 4th call for proposals of the Urban Innovative Actions which is implemented by French region Hauts-de-France.
Public consultation: chlorinated paraffins in food and feed07/08/2019 13:25:00
EFSA is seeking feedback from interested parties on its scientific opinion about the risks to human and animal health related to the presence of chlorinated paraffins in food and feed.
The EU and the United States sign an agreement on imports of hormone-free beef06/08/2019 13:25:00
The EU and the United States have signed an agreement reviewing the functioning of an existing quota to import hormone-free beef into the EU.
State aid: France to recover €8.5m of illegal aid to Ryanair at Montpellier airport05/08/2019 13:25:00
The EC has found that the marketing agreements concluded between the local Association for the Promotion of Touristic and Economic Flows (APFTE) and Ryanair at the airport of Montpellier are illegal under EU State aid rules. Ryanair now has to return €8.5m of illegal State aid.