On 29 July 2019, the European Commission (EC) published its ‘Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions’ regarding Equivalence in the area of financial services’ (Equivalence Communication), in which it states its view and overall approach to third-country equivalence and describes the terms of how the EC will grant equivalence to non-EU countries (so-called “third countries”) in the future.

The Equivalence Communication updates the EU staff working document on the same topic, which was issued in 2017. The Equivalence Communication will likely aid EU authorities with future equivalence determinations, including post-Brexit assessments.

Furthermore, in December 2017, the EC published positive equivalence decisions for trading venues in the US, Australia and Hong Kong. In addition, an equivalence decision under the Markets in Financial Instruments Regulation (MiFIR) on the Shares Trading Obligation for Switzerland on December 2018. The Swiss exchanges (SIX Swiss Exchange AG and BX Swiss AG) were recognised as equivalent by the EC as well, but in contrast to the other jurisdictions, this equivalence decision was made subject to review after one year. While a six-month extension was granted until 30 June 2019, no renewal took place now, which meant that as of 1 July 2019, Swiss exchanges are no longer considered as equivalent. The EC has further reassessed already existing equivalence decisions because of changes in the EU legislative framework and under the Credit Rating Agencies Regulation, a series of decisions, which either renew or repeal existing equivalence decisions for a total of nine countries. Terms regarding insurance and reinsurance did not change markedly from the initial policy used in 2015 and 2016 to grant temporary equivalence to the US and several other jurisdictions.

Oct-Dec 2019 Issue

Squire Patton Boggs