13 June 2008

FESE letter to SEC on mutual recognition

In the forefront of a possible SEC proposal to amend the requirements on foreign broker-dealers' solicitation of institutional investors, FESE announced its concerns that the reform would inadvertently create a ‘regulatory anomaly’.

FESE asked the SEC for an ‘Exemptive Relief’ for exchanges that would allow intermediated access to EU exchanges for wholesale investors.

 

FESE understands that the SEC intends to propose to amend the requirements on foreign broker-dealers' solicitation of institutional investors, including the elimination of the chaperoning requirement.

 

“We are concerned that the reform of Rule 15a-6 - if not coupled with similarly liberalized access to foreign exchanges via U.S. broker-dealers - would inadvertently create a regulatory anomaly”, FESE states.

 

The modernized 15a-6 would allow an expanded class of U.S. investors to be solicited by foreign broker-dealers, who would have market access to European exchanges while SEC-regulated U.S. broker-dealers would not be permitted to have such direct market access, FESE argues.

 

FESE also asks the SEC to ensure that this proposed reform does not favour increased internalization or lead to the diversion of business away from the regulated markets of Europe.

 

The Federation is also concerned about the conditions for competition between U.S. and foreign exchanges and calls the SEC considering a shift from the current exchange rule filing process towards an a posteriori control of rule-making as it has been applied in Europe.

 

Letter

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