The EEA Joint Committee has today adopted nine decisions by written procedure incorporating 31 legal acts into the EEA Agreement, all relating to the European financial supervisory framework.
Incorporating the regulations establishing the European Financial Supervisory Authorities (ESAs) into the EEA Agreement is key to safeguarding a homogenous Internal Market in Financial Services throughout the European Economic Area. The decisions adopted by the EEA Joint Committee extend the post-crisis institutional structure outlined below to the EEA EFTA States, in part by granting new powers to the EFTA Surveillance Authority (the Authority). They allow for the incorporation of numerous acts aimed at rectifying flaws in the pre-crisis financial regulatory framework, and secure continued access for financial undertakings from the EEA EFTA States to the Internal Market.
The ESAs – the European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA) – started operating in 2011. Their main aim is to improve the functioning of the Internal Market by ensuring appropriate, efficient and harmonised European regulation and supervision. The European Systemic Risk Board (ESRB) was established alongside the three ESAs and is responsible for macroprudential oversight in the EU. Importantly, the national supervisory authorities remain in charge of daily supervision of financial undertakings and markets, except for some types of highly specialised undertakings that are cross border in nature. This institutional framework represents the structural backbone of the European regulatory response to the global financial crisis.
Role of the ESAs
The powers of the ESAs include the drafting of technical standards, mediation in cases of conflict between national supervisors, the possibility to ban certain financial products to protect consumers on financial markets, and coordination in emergency situations. In certain instances, they can also issue binding decisions to national authorities and market participants.
Role of the Authority
The Joint Committee Decision (JCD) incorporating the regulations establishing the ESAs and related legal acts adapt the EU framework to the two-pillar structure of the EEA Agreement, following a political agreement reached between the Finance Ministers of Iceland, Liechtenstein, Norway and the EU Member States in October 2014. They agreed that, in accordance with the two-pillar structure of the EEA Agreement, the Authority would take formal decisions addressed to the EEA EFTA competent authorities and market operators in the EEA EFTA States, mirroring the role of the ESAs vis-à-vis the EU Member States. The ESAs will continue to have a non-binding role vis-à-vis the EEA EFTA States, whilst supervisory authorities of the EEA EFTA States and the Authority will be able to participate fully in the work of the ESAs.
From political agreement to incorporation
In March 2016, following extensive negotiations between the EFTA States and EU on how to transform the political agreement into legal texts, the EEA EFTA States submitted the nine draft JCDs including 31 legal acts to the European External Action Service for the incorporation of this regulatory framework into the EEA Agreement. In addition to the three regulations establishing the ESAs and the ESRB, the EEA EFTA States submitted JCDs regarding credit rating agencies, over-the-counter derivatives, central counterparties and trade repositories, short-selling and credit default swaps, and alternative investment fund managers.
So far this year 202 JCDs have been adopted by the EEA Joint Committee, incorporating 337 legal acts into the EEA Agreement.
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