Recital 1

(1)Article 13 of Regulation (EU) No 648/2012 provides for a mechanism to ensure consistency between the legal, supervisory and enforcement arrangements established by the Union and those of third countries in the areas within the scope of that Regulation. The Commission is empowered to adopt equivalence decisions whereby the legal, supervisory and enforcement arrangements of a third country are declared equivalent to the requirements laid down in Articles 4, 9, 10 and 11 of Regulation (EU) No 648/2012 so that counterparties which enter into a transaction within the scope of that Regulation, where at least one of the counterparties is established in that third country, should be deemed to have fulfilled those requirements by complying with the requirements set out in that third country's legal regime. The declaration of equivalence avoids the application of duplicative or conflicting rules. Furthermore, the declaration of equivalence contributes to the achievement of the overarching aim of Regulation (EU) No 648/2012 namely to reduce systemic risk and increase the transparency of derivatives markets by ensuring an internationally consistent application of the principles agreed with third countries and laid down in that Regulation.