Recognition of non-EU regulatory frameworks

In certain cases the EU may recognise that the regulatory or supervisory regime of a non-EU country is equivalent to the corresponding EU regime. This brings benefits to both parties, as

  • it allows authorities in the EU to rely on supervised entities' compliance with equivalent rules in a non-EU country
  • it reduces or even eliminates overlaps in compliance requirements for both EU and foreign market players
  • it makes certain services, products or activities of non-EU companies acceptable for regulatory purposes in the EU
  • it allows less burdensome prudential regime to apply to EU banks and other financial institutions with exposures in equivalent non-EU countries

Equivalence assessment

Most of EU laws on financial regulation adopted in recent years include provisions that make it possible for the Commission to adopt equivalence decisions.

Typically, these provisions require the Commission to assess whether the rules applied in a certain non-EU country are equivalent to those applied in the EU and verify that they

  • have legally binding requirements
  • ensure effective supervision by authorities
  • achieve the same results as the corresponding EU rules

The Commission usually carries out these assessments on the basis of technical advice from the European supervisory authorities (EBA, ESMA or EIOPA). In some cases all technical work is done by the Commission, with the assistance of external consultants.

Once the technical assessment is complete and all technical criteria are satisfied, the Commission can formally adopt an equivalence decision.

Equivalence decisions

An equivalence decision may take the form of an implementing or delegated act, in accordance with what is envisaged in the corresponding equivalence provision in the basic act. The equivalence decision may stipulate

  • whether equivalence is granted in full or partially
  • whether it is granted for an indefinite period or with a time limit
  • whether it applies to the entire supervisory framework of a non-EU country or only to some of its authorities

List of equivalence decisions adopted by the Commission in the area of banking and finance

Documents

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