Equivalence in the area of financial services

Summary:

Communication presented on 29 July 2019 by the European Commission taking stock of the EU’s overall approach to equivalence and highlighting some of the current challenges that this policy faces.

Further information:

In keeping with the global nature of financial markets, the EU considers how its domestic framework for financial services covers cross-border activities and exposures to risks in third countries and how that framework interacts with other regulatory regimes. At the same time, the EU monitors and, where necessary, dynamically responds to external regulatory and supervisory developments that may impact the broader regulatory environment for market participants active in the Union.

Jurisdictions across the globe use different methods to manage internally the various risks and challenges deriving from cross-border activities. These methods range from applying the domestic regime in cross-border situations, to deferring to third-country rules and supervisory outcomes, to fully exempting certain cross-border activities.

The main EU approach, referred to as equivalence, involves a positive assessment of the third-country framework, which enables reliance on third-country rules and the work of the third-country supervisor. In practice, the EU may determine that the regulatory or supervisory regime of a third country is equivalent to the corresponding Union regime and this allows authorities in the EU to rely on supervised entities' compliance with equivalent rules in such a country.

European Commission: Press Release, 29/07/2019: Financial services: Commission sets out its equivalence policy with non-EU countries https://europa.eu/rapid/press-release_IP-19-4309_en.htm

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