The EC Vice President Valdis Dombrovskis spoke at the second annual EU-Asia Pacific Forum on Financial Regulation. In context of the increasing interconnections between the financial sectors in EU and Asia Pacific, he highlighted the benefits and importance of bilateral dialog on financial regulation, along with the necessity of cooperation between financial regulators in the two regions. The EC Vice President also discussed the regulatory proportionality, regulatory equivalence, and fintech developments.
He described the achievements of European regulators in the area of financial governance, also highlighting the ongoing work toward making the rules more growth friendly and proportionate. In this context, he cited the example of the Call for Evidence in the EC's assessment of the combined impact of financial services regulation, which is "leading to targeted improvements. It is allowing us to follow a more proportionate approach without weakening our prudential framework. It was the first example globally of such a holistic exercise and others are now following suit, including the US." With regard to fintech, he highlighted that "Asia is already advanced." Regulatory sandboxes are up and running in several countries in the Asia Pacific, including Singapore, Australia, Hong Kong, and Japan. In Europe, he highlighted that services such as mobile payments, peer-to-peer lending, and online investments are already benefiting millions. "We must start preparing for the increasing use of new technologies such as cloud computing, artificial intelligence, and distributed ledgers. Europe has what it takes to develop a globally competitive fintech sector." EC is working on preparing a Fintech Action Plan for early next year, which will include a proposal to enable EU-wide crowdfunding and peer-to-peer lending.
Additionally, Mr. Dombrovskis highlighted that the EU has been very open to recognize that its international partners' rules are equivalent and achieve the same regulatory objective. The EU process is based on applying the equivalence criteria in a way that is proportionate to the risks identified and work is ongoing to improve the visibility and understanding of this process, with better online information and ad-hoc guidance. He also emphasized that EC closely monitors third countries’ ongoing compliance with equivalence and is open to further develop equivalence, where needed. In this context, he gave an example the revised Markets in Financial Instruments Directive and Regulation (MIFID II/MiFIR), which will put in place key international commitments on improving transparency and introducing more orderly trading in derivatives. As part of this, certain Asian shares will be subject to a trading obligation, in case EU trading in those shares exceeds a certain threshold. For EU firms to continue trading in those shares on an Asian exchange, an equivalence decision will have to be issued. He said: "Decisions for several jurisdictions are currently in preparation, including for the ones in the Asia Pacific region. For countries not covered, you can safely assume that there is no trading obligation for shares. For these countries, trading continues as before. ... We will engage on equivalence with all jurisdictions that have likewise implemented their G20 commitments on a trading mandate for derivatives. "
In conclusion, he said: "For the next few decades, Asia's economic growth is expected to lead the world. As your countries leap forward in economic and technological progress faster than anyone has before, your financial systems will evolve in tandem. At the same time, financial integration within the Asia Pacific region will keep advancing, just like it has done in the EU's single market. With this forum, we want to work with you towards mutual recognition of rules and a shared vision for growth and financial integration."
Related Link: Speech
Keywords: Europe, EU, Banking, Securities, MiFID II, Fintech, Asia Pacific, Proportionality, Equivalence, EC
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