Building a Global Framework for Securities Markets
Key Policy Goals of Globalized Securities Markets:
Promote Regulatory Transparency In Foreign Markets. For U.S. securities firms to maximize their competitiveness overseas, regulators should adopt procedural rules and substantive regulations that are comprehensible, transparent to the public, and fair. The SEC also needs to overhaul its rule establishing the conditions under which a foreign brokerdealer may operate within the U.S. without registering with the regulator. Similarly, the commission should employ greater recognition of modern risk-management tools to better facilitate global trading.
Harmonize Accounting Rules. A sound, uniform standard of accounting would improve transparency and enhance competition among market centers worldwide. The SEC should continue working with the London-based International Accounting Standards Committee to develop an appropriate alternative to U.S. Generally Accepted Accounting Principles that would, among other things, simplify listing securities for trading in multiple markets.
Improve Global Clearance And Settlement. Today’s cross-border capital flows are hampered by a lack of standardization, manual procedures, incompatible technologies, excessive costs, multiple service providers, and a relatively high rate of errors and costly trade failures. These shortcomings, when coupled with the dramatic rise in cross-border investing, the increased complexity of investment strategies, global public pension reform, an aging world population, and the compression of the settlement cycle, make it imperative to improve the global clearance and settlement system.
Create A Global “Passport.” A global passport would enable securities firms that have received approval to do business in countries that have similar standards and regulations to operate more freely throughout the world without having to meet unique regulatory burdens in each country.