SEC consults on foreign broker activities in US

30 June 2008

The proposed amendments would increase the range of services foreign broker-dealers are allowed to offer in the US.

The SEC consults on its proposed amendments to increase the range of services foreign broker-dealers are allowed to offer in the US. The proposed amendments also would maintain a regulatory structure designed to protect investors and the public interest.

 

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.

 

The SEC's proposals would modify the requirement that any contact by a foreign broker-dealer with a U.S. institution must be chaperoned by a person registered with a U.S. 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," said SEC Chairman Christopher Cox. "Further difficulties for U.S. investors arise because U.S. registered personnel have to be available for communications with foreign broker-dealers. Taken together, these limitations seriously hamper the service of U.S. investors, while making them pay for brokerage services twice. They also effectively limit U.S. investors' access to certain foreign investments."

 

The consultation period end within 60 days after their publication in the Federal Register.

 

Press release

Proposed Rule Release

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