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SEC Chairman Christopher Cox and the EC Commissioner for Internal Market and Services, Charlie McCreevy met in Washington last Friday, February 1st for discussion on topics including current market volatility, accounting standards, sovereign wealth funds, credit rating agencies, XBRL developments and mutual recognition of securities regulation.
They have agreed to launch an EU-US mutual recognition arrangement for securities – this would give US and EU investors access to more information on a broader market and allow greater diversification of securities portfolios. It would also reduce transatlantic trading costs and increase regulatory oversight coordination.
The plan has the combined goals of increasing transatlantic market efficiency and liquidity while enhancing investor protection. Cox and McCreevy in a joint statement, said "The US and EU, which comprise 70% of the world's capital markets have a common interest in developing a cooperative approach to reducing regulatory friction and increasing investor access to investment diversification opportunities and enhancing investor protections. The concept of mutual recognition offers significant promise as a means of better protecting investors, fostering capital formation and maintaining fair, orderly, and efficient transatlantic securities markets. As we consider implementation of this concept, we encourage input from market participants."
As a first step, SEC and European Commission staff, assisted by the Committee of European Securities Regulators (CESR) will develop a framework for the mutual recognition discussions. Whilst recognising that domestic processes must continue, Cox and McCreevy instructed their staffs to intensify work on a possible framework during 2008 and agreed to work closely together during the year to review overall progress. SEC, EC and CESR staff will hold regular technical meetings over the year to begin to develop the securities mutual recognition framework.
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