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SEC, CESR To Cooperate On Regulatory Reform

by Glen Shapiro,, New York

19 November 2010

The Securities and Exchange Commission (SEC) Chairman, Mary L. Schapiro, and the Committee of European Securities Regulators (CESR) Chairman, Carlos Tavares, recently met in Paris to discuss regulatory reform efforts in the United States and the European Union (EU).

It was said that, as securities regulators in both the US and EU are currently crafting new and wide-ranging rules designed to address regulatory concerns that arose during the recent financial crisis, the discussions focused on a number of topics, including the regulation of over-the-counter derivatives and oversight of credit rating agencies and managers of hedge and private equity funds.

The CESR and SEC also shared views regarding market structure issues, systemic risk, and issues relating to the convergence of International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP).

Since so many globally active financial firms operate in both the United States and Europe and would be subject to new rules in both markets, the SEC and CESR agreed to meet to discuss the cross-border implications of EU and US efforts. They also are considering how these efforts might be coordinated to improve their effectiveness while minimizing the likelihood of regulatory arbitrage and unnecessary conflicts of laws.

Schapiro said: "As the activities of market participants continue to expand internationally, we need to ensure our regulatory initiatives are properly coordinated. Our ongoing dialogue with CESR is particularly important as we seek to implement our respective legislative agendas while minimizing the burden for market participants that operate across borders."

Tavares added that "Europe's and US securities markets face today many of the same challenges. It is therefore very important to acknowledge that the regulatory measures we adopt should be as aligned as possible. The European Commission is currently undertaking a significant regulatory review and, similarly, the Dodd-Frank Act will lead to important changes in regulatory approaches in the US.”

He continued: “The differences in the respective legislative proposals, the timing of their implementation and the changes in institutional legal structure which these will bring about will require a continuous dialogue between EU and US institutions in order to ensure that these regulatory initiatives avoid regulatory arbitrage and simultaneously enhance market efficiency.”

During the discussion, both the SEC and CESR pledged to continue periodic discussion on these issues as they implement new regulations and to work collaboratively regarding possible areas for future collaboration as they oversee market participants registered in each jurisdiction.

TAGS: investment | private equity | law | financial services | capital markets | hedge funds | offshore | venture capital | United States | regulation | European Union (EU) | services | Europe

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