SEC-FSA strategic dialogue meeting – special attention to hedge fund regulation
03 February 2010
The purpose of the dialogue is for the two agencies to engage at senior level in current issues affecting the US and UK capital markets and areas of future collaboration. Cooperative efforts in areas such as CRAs, AIFM and the clearing of OTC derivatives are increasing.
Financial Services Authority (FSA) Chairman Lord Turner and Chief Executive Hector Sants met US Securities and Exchange Commission (SEC) Chairman Mary Schapiro as part of the SEC-FSA Strategic Dialogue. The purpose of the Dialogue, which was established in 2006, is to engage at the senior level in current issues affecting the US and UK capital markets and areas of future collaboration. This was the fifth meeting of the Dialogue. Some of the areas of mutual interest discussed during today’s meeting included:
· Corporate governance and executive compensation;
· Regulation of hedge funds and investment advisors and the protection of customer assets;
· Disclosure regimes around client asset risks;
· Market infrastructure, particularly relating to central counterparties for OTC derivatives;
· Market supervision;
· Cooperation on cross-border supervision.
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At the meeting Schapiro, Turner and Sants agreed that, given the linkages between the US and UK markets, enhanced supervisory cooperation is critical to market integrity. Cooperative efforts between the staffs of the two agencies in areas such as oversight of credit rating agencies, hedge fund advisers and the clearing of OTC derivatives are increasing. To facilitate this expanding cooperation, the two agencies plan to review the existing Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information Related to the Supervision of Financial Services Firms and Market Oversight, entered into by the SEC and the FSA in 2006. This memorandum of understanding is designed to promote the coordination of robust and sound supervision of cross-border financial institutions and markets.
Today’s Dialogue also provided the opportunity for the SEC and the FSA to continue discussions in the areas of corporate governance, particularly board risk oversight, and executive compensation. Consistent with the emerging international consensus, the current efforts of both agencies seek to address, among other things, the intrinsic links between the types and degree of risks regulated entities/registrants assume and their corporate governance and compensation policies.
FSA chief executive Hector Sants said:
“Global cooperation between regulators is central to tackling the reform agenda and the relationship between the FSA and the SEC is key for international markets. Our ongoing dialogue gives us the opportunity to widen the areas of cooperation between the FSA and the SEC, in particular, progressing our collaborative work on hedge funds and credit rating agencies.”
SEC chairman Schapiro said:
“This Dialogue has proven its utility again in allowing the SEC and FSA to share expertise and experiences regarding the rapid changes occurring in our capital markets. As regulatory reform advances on both sides of the Atlantic, we can feed this combined body of knowledge into the development of high-quality regulatory systems that take into account both national and international market dynamics.”
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