The Securities and Exchange Commission (SEC) published last Friday for public comment proposed rule amendments to increase the range of services foreign broker-dealers are allowed to offer in the United States.
The proposed amendments also would maintain a regulatory structure designed to protect investors and the public interest.
The Commission voted unanimously on 25th June, 2008, to issue the proposed rule amendments for public comment.
The SEC's proposals would modify the requirement that any contact by a foreign broker-dealer with a US institution must be chaperoned by a person registered with a US broker-dealer.
"In practice, this chaperoning requirement has proven unwieldy as investors face significant inconvenience caused by differences in time zones and limitations on when investors can be contacted," commented SEC Chairman Christopher Cox, adding:
"Further difficulties for US investors arise because US registered personnel have to be available for communications with foreign broker-dealers. Taken together, these limitations seriously hamper the service of US investors, while making them pay for brokerage services twice. They also effectively limit US investors' access to certain foreign investments."
Erik Sirri, Director of the SEC's Division of Trading and Markets, added:
"While the Commission has provided a useful framework for US investors to access foreign broker-dealers for almost two decades, ever increasing market globalization suggests that it is time to revisit that framework to consider whether it could be made more workable."
In general, the SEC's proposed amendments would expand and streamline the conditions under which a foreign broker-dealer could operate without triggering the registration, reporting and other requirements of the Exchange Act and related rules that apply to broker-dealers that are not registered with the Commission.
Among other things, foreign broker-dealers would continue to be subject to the antifraud provisions of the federal securities laws.
Public comments on today's proposed amendments must be received by the Commission within 60 days after their publication in the Federal Register.
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