EU Debate on Usefulness of Equivalence Regime Under the Prospectus Regulation

The European Securities and Markets Authority has published a letter it addressed to the European Commission about the technical advice that the Commission requested from ESMA on the general equivalence criteria to guide future equivalence assessments for prospectuses prepared under the laws of third countries. The Prospectus Regulation allows national regulators of EU member states to approve a prospectus for an offer of securities to the EU public or for admission to trading on an EU exchange, prepared in accordance with the laws of a third country, provided the disclosure laws of the third country are equivalent to those of the Prospectus Regulation. The Commission is empowered to adopt legislation setting out general equivalence criteria and may also adopt a decision determining that the laws of a specific third country are equivalent.

ESMA's letter to the Commission states that, following engagement with national regulators and market stakeholders, it has concluded that the operation of the equivalence regime under the Prospectus Regulation would cause significant challenges and ESMA asks the Commission to consider whether the mandate for technical advice should be continued under the existing text of the Prospectus Regulation. ESMA does not consider that the equivalence regime provides "value-add" since a prospectus drawn up under a third country's laws must be assessed against the provisions of the Prospectus Regulation. In addition, the Prospectus Regulation points to certain provisions for national regulators to consider, but omits certain important parts of the EU prospectus regime.

View ESMA's letter.

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