Trans-Atlantic Coalition Calls for Global Securities Regulations

The EU-US Coalition on Financial Regulation is calling on policy makers in the US and the European Union (EU) to resume discussions of a framework to regulate the trade of securities, derivatives, and other financial instruments.   

The Coalition was established in 2005 to encourage governments and regulatory authorities in Europe and the U.S. to move forward on inter-jurisdictional regulatory recognition and exemptive relief on the basis of regulatory compatibility, and where possible to establish appropriate mutual rules.  The overall objective is to facilitate customer choice and market access to financial services on a global basis.

The Coalition commissioned the international law firm Clifford Chance LLP to produce a report on the need to resume a dialogue to establish a framework of transatlantic inter-jurisdictional regulatory accreditation and recognition. These discussions were abandoned when the financial crisis hit in 2008.

The new report, Inter-jurisdictional Regulatory Recognition: Facilitating Recovery and Streamlining Regulation, cites a call by the G20 in 2010 for vigilance "to ensure open capital markets and avoid financial protectionism".  A press release from the eleven Association members* of the Coalition states they have become increasingly concerned by growing elements of regulatory extraterritoriality and protectionism in both the EU and US programs for regulatory overhaul, which are increasingly inconsistent with this G20 call for vigilance.

The report states that while it recognizes there are differences in the overarching legal systems and in the market practices and regulatory priorities of the EU and the US, there is a common foundation between their regulatory policies, objectives, standards and outcomes. These are sufficient to secure a level of regulatory inter-reliance that will help to sustain the international competitiveness of transatlantic businesses.  "Importantly, such an approach will also reduce legal risk, compliance complexity, regulatory uncertainty and transactional costs that will flow from what is an increasingly fragmented regulatory approach."

The report states that International Organization of Securities Commissions' (IOSCO's) "38 Objectives & Principles of Securities Regulation" issued in 1998 and updated in 2010 provide an internationally-accepted foundation of regulatory adequacy. The Coalition recognizes, however, that regulatory interdependence will require a greater degree of in-depth analysis and due diligence, if it is to be credible and effective but it does provide a credible starting-point for building international regulatory accreditation.

*American Bankers Association Securities Association, Association of Financial Markets in Europe, Bankers' Association for Finance and Trade, British Bankers' Association, Futures Industry Association, Futures and Options Association, International Capital Market Association, Investment Industry Association of Canada, International Swaps and Derivatives Association
Securities Industry and Financial Markets Association, Swiss Bankers Association (SBA)