The US Securities and Exchange Commission (SEC) has announced a series of actions it intends to take to further the implementation of the concept of mutual recognition of securities laws for what it deems to be high-quality regulatory regimes in other countries. Mutual recognition is expected to make it easier for US brokers and investors to access foreign stock exchanges and improve global cross-border trading.
The commission is contemplating four actions. The first is exploring initial agreements with one or more foreign regulatory counterparts, which would be based upon a comparability assessment by the SEC and the foreign authority of one another’s regulatory regimes.
The SEC is also considering adoption of a formal process for engaging other national regulators on the subject of mutual recognition. This process could be accomplished through rulemaking or other appropriate mechanisms, possibly informed by one or more initial agreements with other regulators.
Thirdly, the commission is mulling developing a framework for mutual recognition discussions with jurisdictions comprising multiple securities regulators tied together by a common legal framework, including Canada (which has no national securities regulator, but rather provincial regulators) and the European Union (whose national securities regulators are subject to supranational legislation and directives).
Finally, the SEC is proposing reforms to Rule 15a-6 to improve the process by which US investors have access to foreign broker-dealers.
“The steps we are announcing today are designed to better coordinate SEC regulation of the US capital markets with our counterparts’ regulation in the larger global marketplace,” said SEC chairman Christopher Cox in a statement. “Innovations in technology have eliminated many barriers to cross-border access between US and foreign markets, and that in turn has increased US investor demand for foreign investment opportunities. By beginning to build a sturdy basis for cooperation among securities regulators who share the same concerns, we can greatly improve investor protection and market efficiency worldwide.”