EC released a communication setting out the comprehensive approach and recent legislative improvements in terms of how EC grants equivalence to non-EU countries. EC also published certain implementing decisions on the equivalence for financial benchmarks and credit rating agencies in various non-EU countries. The implementing decisions shall enter into force on the twentieth day following that of their publication in the Official Journal of the European Union.
EC has adopted equivalence decisions for financial benchmarks administered in Australia and Singapore. These equivalence decisions recognize that the administrators of certain interest rates and foreign exchange benchmarks in Australia and Singapore are subject to legally binding requirements that are equivalent to the EU requirements set out under Benchmark Regulation (EU 2016/1011). Separately, EC has extended existing equivalence decisions in the field of credit rating agencies for Hong Kong, Japan, Mexico, and the United States. EC has, for the first time, repealed existing decisions for Argentina, Australia, Brazil, Canada, and Singapore, as these jurisdictions could no longer meet the standards set by the EU Credit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 Regulation after its amendment in 2013.
The EC communication describes how EC and ESAs monitor the situation in those countries after equivalence decisions have been taken, to ensure that these continue to fulfill EU objectives and preserve financial stability, investor protection, market integrity, and a level playing field in EU. This communication 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—particularly with the increased role for ESAs. These recent legislative changes, for instance in the amended ESA regulations, strengthen the roles of these EU authorities in monitoring equivalent third countries. The EC communication also sets out how recent updates to EU legislation will ensure even greater effectiveness of the single rulebook, supervision, and monitoring while fostering cross-border business in global markets. EC has, to date, taken over 280 equivalence decisions with regard to over 30 countries.
EU equivalence has become a significant tool in recent years, fostering integration of global financial markets and cooperation with the third-country authorities. EU assesses the overall policy context and to what extent the regulatory regimes of a given third country achieve the same outcomes as its own rules. A positive equivalence decision, which is a unilateral measure by EC, allows EU authorities to rely on third-country rules and supervision, thus enabling market participants from third countries who are active in EU to comply with only one set of rules.
Effective Date: August 19, 2019 (implementing decisions)
Keywords: Europe, EU, Asia Pacific, Americas, Hong Kong, Japan, US, Mexico, Australia, Singapore, Brazil, Canada, Argentina, Bank9ing, Securities, CRA, Equivalence Decisions, Third Country, CRA Regulation, ESAs, EC
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