On July 10, the European Securities and Markets Authority (ESMA) published a letter (dated July 7) (Letter) from Steven Maijoor, ESMA chair, to Valdis Dombrovskis, European Commission (EC) vice president, on the regulatory regimes for non-EU countries (known as “third countries”) where they are within ESMA’s area of authority.
In the letter, Mr. Maijoor refers to the EC’s recent suggested improvements in the way the European Union deals with third countries in the financial services sector. Areas of improvement include access to information, and the timely identification of changes in third-country legal and regulatory frameworks, practices, infrastructures and supervisory approaches. ESMA agrees with the EC that these areas should be strengthened to avoid uneven playing fields and regulatory arbitrage, and to ensure financial stability and investor protection in the European Union.
ESMA refers to the EC’s proposal for amending the European Market Infrastructure Regulation (EMIR) (for further information, please see the Corporate & Financial Weekly Digest editions of May 5 and June 16), specifically in relation to the requirements for the recognition of third-country central counterparties (CCPs). ESMA believes that enhancing the implementation and monitoring of the equivalence decisions on third-country regimes (by giving the EC the ability to set specific conditions, and ESMA carrying out regular monitoring of the relevant third-country regulatory and supervisory framework), as suggested in the EC’s proposal, represents a significant improvement.
The Letter goes on to state that, in light of the UK’s withdrawal from the EU and the entities with a potential impact on EU financial stability and investor protection remaining in what will become a “third-country,” ESMA invites the EC to consider whether similar proposals to those for CCPs should be considered for other market infrastructures and key market players. ESMA believes that this should include third-country regimes for credit rating agencies, trade repositories and benchmarks, and possibly also for trading venues and data providers.
The Letter can be found here.