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Equivalence of non-EU financial frameworks

The European Commission can determine that the regulatory or supervisory frameworks of non-EU countries are equivalent to the EU's corresponding frameworks. This equivalence can provide various benefits, such as reducing compliance overlaps, allowing EU authorities to rely on non-EU compliance, and enabling certain non-EU financial services to operate within the EU under more favorable conditions.

Equivalence of Non-EU Regulatory Frameworks

Equivalence decisions can lead to several benefits for both the EU and non-EU countries:
  • EU authorities can trust that entities in non-EU countries comply with similar regulations, reducing the need for additional oversight.
  • Compliance requirements are streamlined, easing the regulatory burden on both EU and non-EU market participants.
  • Non-EU companies can offer certain financial services, products, or activities within the EU.
  • EU banks may benefit from more favorable capital requirements for exposures in equivalent non-EU countries.
  • In some cases, third-country firms might provide services in the EU without needing a physical presence.

Equivalence Assessment

EU financial regulations often include provisions allowing the European Commission to make equivalence decisions. These decisions are based on assessments to ensure that non-EU rules:
  • Are legally binding.
  • Ensure effective supervision by competent authorities.
  • Achieve similar outcomes as the corresponding EU regulations.
The European supervisory authorities (EBA, ESMA, EIOPA) typically provide technical advice for these assessments. In some cases, the European Commission conducts the assessment with external consultants' help. Once all criteria are met, the Commission can formally adopt an equivalence decision.

Equivalence Decisions

Equivalence decisions can vary in form and scope:
  • They can be full or partial.
  • They may be granted indefinitely or for a limited period.
  • They can apply to an entire non-EU supervisory framework or a specific area.
  • They may include specific conditions.

For more details, including a list of all equivalence decisions, you can download the overview table of equivalence/adequacy decisions provided by the European Commission. This document includes decisions related to various regulations such as the Accounting Directive, Audit Directive, Capital Requirements Regulation (CRR), and more.

Key Regulations