SEC Discusses Closer Regulatory Harmony With UK's FSA

by Mike Godfrey, for LawandTax-News.com, Washington

06 June 2006

Securities and Exchange Commission Chairman Christopher Cox on Friday met with Callum McCarthy, UK Financial Services Authority Chairman in Washington, DC to discuss the regulatory aspects of increased capital flow between the US and Great Britain and the regulation of hedge funds.

The agenda included the implications of potential cross-border exchange mergers and other common areas of regulatory interest, and identified areas for future collaboration.

The regulatory chiefs discussed interactive data reporting and the use of technology to enhance transparency, simplify investor disclosure and make regulation more efficient and effective. They agreed to identify incentives for market participants to use interactive data and to designate staff from both agencies to coordinate implementation.

The regulators also conducted a "wide-ranging discussion" of the activities of hedge fund advisers, their relationships with other financial entities, and regulation by US and UK authorities. Both organizations agreed to exchange more information on the activities of hedge fund advisers and to collaborate in related areas of regulatory concern.

Other matters addressed by senior officials from the agencies included the need to maintain open channels of communication between the US and the UK regulators in the event of a financial crisis.

In the light of the agreement between the New York Stock Exchange and the pan-European exchange operator Euronext last week, the SEC and FSA also considered increasing collaboration to address proposed and potential trans-national ownership of exchanges.

Commenting on the meeting, Cox stated that the discussions would help regulators prepare for "potentially significant changes in our capital markets on both sides of the Atlantic".

"Our increasingly global markets demand increased cooperation among national regulators in order to promote high standards and strong investor protection," Cox observed.

FSA CEO John Tiner, who also participated in the discussions, added that: "Today's discussion focused on the regulation of trading platforms and the related infrastructure, and of hedge funds. These are clearly areas of high priority for regulation, and today we made good progress in developing a shared understanding of the issues and how to approach them."

The agencies agreed to a follow-up meeting in London toward the end of 2006.

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