Joint letter to Vice-President Dombrovskis: “Investment Firm Regulation – third country firm regime" - November 2018
FIA, Deutsches Aktieninstitut, AFME, EDMA, ICMA, Swiss Finance Council and ISDA (together “the Associations”) welcome the debate about equivalence and support the reforms to promote the safety and transparency of markets globally. A stable and robust equivalence framework is critical to preserve the integrity of and access to EU capital markets, facilitating European financing and growth. Consistent with ensuring a level playing field and without jeopardising the integrity of the Single Market, EU capital markets must remain open and accessible.
EU financial market participants need to be able to trade with financial market participants around the world to diversify risk, to access liquidity, and for investment opportunities. We also believe that the common practice of cross-border trading and clearing activity result in better outcomes for the real economy by providing end users with access to greater pools of liquidity than may be available simply domestically and/or regionally. Furthermore, EU based companies regularly depend upon accessing non-EU primary markets for needed capital formation, expansion of their businesses and job creation.
Capital markets are global in nature and separating the EU from other markets would be a significant backwards step for the development of EU capital markets.
Imposing new limits on the scope of equivalence will be to the detriment of EU markets. If market access to third country firms by EU issuers and investors becomes more difficult this would make EU markets less attractive and be at odds with the aim of enhancing their capacity to attract external capital. It is important that the EU’s equivalence regime does not become so restrictive that it unduly restricts normal and needed capital flows within the EU or between the EU and other regions or is detrimental to end-users of financial products and services in Europe.
The Associations support the Commission’s report when it calls for the EU to develop the capacity to monitor non-EU firms in order for EU authorities to manage cross-border risks, rather than trying to prevent cross-border business.