A working document of the European Commission expresses the view that the European rules allowing the financial legislation of a third country to be considered equivalent to that of the EU works perfectly well, although the consistency of these rules, enshrined in 16 different legislative texts, could be better.
The experience acquired in the application of the equivalence rules as a mechanism to allow cross-border regulatory issues to be dealt with can be considered satisfactory overall, the European institution notes. However, it finds that a number of areas require increased attention. In particular, the provisions on the Commission granting an equivalence decision between the financial rules of a third country and European law are not always consistent. This situation concerns the precision of the analysis of the regulatory and supervision framework and the part played by the European supervisory authorities (ESMA, EBA, EIOPA), two aspects that differ between legislative acts.
To date, the Commission has made 212 equivalence decisions on the financial legislation of 32 countries and jurisdictions with the European rules. Japan has 17 of these decisions, followed by Canada and the United States (16 decisions), Australia (30), Brazil (12), Singapore (11) and Switzerland (10).
In early February, the European Securities and Markets Authority (ESMA) called for the European rules underpinning the equivalence mechanism to be revised, on the grounds that they are administratively unwieldy and based on the great trust that Europeans place in third countries (see EUROPE 11721).
Close attention will be paid to the Trump administration's attitude, as this could have an impact on the equivalence decisions regarding the United States, should the rules be relaxed excessively.
The nature of the future relationship between the EU and the United Kingdom, once their divorce has gone through, could also affect the equivalence mechanism. However, the Commission said on Monday that a legislative initiative to streamline the mechanism by means of a single legislative text was not at this stage necessary. (Original version in French by Mathieu Bion)