The Committee on Economic and Monetary Affairs has published a report on relationships between the EU and third countries on financial services regulation and supervision. The report calls for a Resolution requiring the Commission to review how current equivalence decision procedures work, to provide greater and clearer transparency, and says there is a clear move towards allowing something akin to passporting following decisions to allow Swiss venues to operate under MiFID.
The report notes that:
- since the financial crisis, there have been more than 40 new pieces of EU financial legislation, of which 15 include third country provisions;
- equivalence and passporting are fundamentally different concepts, and equivalence does not confer passporting rights;
- no trade agreement involving the EU has ever incorporated cross-border mutual access for financial services;
- there is no single framework or consistency between equivalence provisions or how equivalence is decided, but that equivalence is supposed to be a fair tool that promotes international regulatory convergence. Decisions are based on the single rulebook and should be subject to greater Parliamentary scrutiny;
- the Commission describes equivalence as “a key instrument to effectively manage cross-border activity… with third country jurisdictions….”; and
- Brexit will potentially have a significant impact on financial regulation, and that the Commission and the ESAs must be prepared to protect financial stability if there is no agreed transition period.