Here are explanations of three terms in the harmonization dialogue.
- Equivalence: A policy whereby two or more regulatory regimes, though substantively or procedurally different in some respects, may still be considered broadly equivalent to each other because they produce similar outcomes and/or enforce similar regulations on jurisdictions. (Source: Harvard Law School)
- Mutual Recognition: Mutual Recognition can facilitate equivalence policies by allowing licenses and regulations given by one jurisdiction to be considered valid in others. (Source: University of Virginia Law School)
- Substituted Compliance: The Commodity Futures Trading Commission (CFTC)’s substituted compliance policy indicates that “a non-U.S. swap dealer or non-U.S. major swap participant will be permitted to conduct business by complying with its home regulations” without additional requirements from the CFTC’s swaps regime if the CFTC finds that such home regulations are comparable to its swaps regulations. (Source: CFTC Cross-Border Interpretive Guidance)