Transatlantic Financial Services Regulatory Dialogue

The Program on Corporate Governance has just issued A Report on the Transatlantic Financial Services Regulatory Dialogue, a detailed analysis of the critical dialogue among U.S. and E.U. regulators on how to oversee increasingly interdependent international financial markets.  The Report‘s authors, Kern Alexander, Eilis Ferran, Howell E. Jackson, and Niamh Moloney, describe a recent roundtable including officials of the SEC, European Commission, and academics addressing a wide range of issues in international securities regulation. 

The highlights included:

–The applicability of Sarbanes-Oxley to foreign companies listed on American exchanges, especially the continued applicability of Sarbanes-Oxley to some delisted firms;

–Whether U.S. and E.U. regulations are unduly restricting competition among clearing and settlement firms;

–Whether local regulations and practices should govern auditing and accounting standards, or exchange-based requirements should be imposed on foreign issuers;

–How credit agencies should be regulated in foreign markets, and whether an international enforcement mechanism for such regulations is needed; and

–Whether the International Accounting Standards Board can and should provide guidance for corporate governance and accounting standards in the United States as well as the European Union.

In addition, the Report describes a program for future work in upcoming dialogue between the roundtable participants. That program will include:

–Discussions on a broader framework for regulatory cooperation, particularly with respect to the applicability of host-nation laws to foreign issuers;

–Debate on whether stringent applicability of host-nation laws encourages issuers to seek less stringent regulatory environments, resulting in less effective regulation of international financial markets as a whole; and

–Developing specific best practice recommendations with respect to the regulation of (a) credit rating agencies and (b) financial conglomerates.

The Report is a must-read for those interested in the convergence (or lack thereof) of regulation of transatlantic securities markets.  The full Report may be accessed here.