The European Commission has published a Communication to the EP, Council, EESC and the Committee of the Regions on preparations for the end of the transition period. The Communication looks at:
- changes happening in any scenario; and
- preparing for any scenario.
On financial services, it notes, obviously, that the single passports will cease to apply and so the provision of financial services from the UK to the EU will depend on the third country rules of each Member State. It also points out the now well-known fact that equivalence determinations are not the same as the passport, and only a limited number of equivalence frameworks allow third-country firms to provide their services to EU clients. It notes that equivalence decisions are taken on the basis of assessment, may be reversed, and that decisions will be made in the light of the UK’s stated intention to diverge from EU frameworks after the end of the transition. It confirms that is was not possible for it to carry out its assessments because, by the end of June deadline, the UK had returned only 4 of 28 questionnaires the Commission had sent it.
The report notes that equivalence decisions are already in place for central banks and public bodies under EMIR and MAR, and a central bank exemption under the SFTR and MiFIR. It is considering a time-limited equivalence decision for CCPs clearing derivatives.
But, in areas where the EU Framework is not fully in place, there will be no equivalence decisions in the short or medium term. These areas include MiFIR in respect of services to professional clients and ECPs and for third-country trading venues and CCPs, MiFID 2 in respect of regulated markets and the Prospectus Regulation.