Regulatory bodies in the US and UK have agreed to explore common approaches to reporting and other regulatory requirements for market participants such as hedge funds and their advisors.
The agreement follows a meeting between Mary Schapiro, chairman of the US Securities and Exchange Commission (SEC) and Hector Sants, CEO of the UK Financial Services Authority (FSA). The meeting was part of the SEC-FSA Dialogue initiative, under which the two regulators meet periodically to discuss areas of mutual interest.
The two regulators agreed to identify a common, coherent set of data requirements for hedge funds and their advisers to help identify risks. Other issues discussed included central clearing for over-the-counter (OTC) derivatives, short-selling and compensation practices.
In recent months, both the SEC and FSA have announced similar plans to promote the use of central counterparties (CCPs) for the clearance of credit default swaps and OTC derivatives and are actively cooperating in the oversight of CCPs.
“As the regulators of two of the world’s major market centres, the SEC and the FSA have a strong interest in collaborating with respect to OTC markets and hedge funds, credit rating agencies and other market participants with cross-border operations,” said Schapiro in a statement. “Only through strong cooperation can we achieve coherent oversight of global actors and limit opportunities for playing the regulatory seams.”
“The global crisis has underlined how intertwined financial markets and institutions are, and regulators around the world have to work together to ensure appropriate oversight. We are all working alongside the Financial Stability Board and other international regulatory committees to drive forward global financial reforms,” added Sants. “The strategic dialogue with the SEC is a valuable component of the discussions around these reforms, particularly in areas of joint interest and in identifying potential regulatory gaps.”