US stock markets become less competitive: panel

WASHINGTON (Reuters) - U.S. stock markets have become even less competitive this year, with more foreign companies delisting their shares, according to a report released on Tuesday.

The report authored by a panel of businessmen and academics found that 56 foreign companies delisted their shares from U.S. exchanges in the first 10 months of 2007.

That is up from 30 foreign companies delisting their shares in 2006, and up significantly from a decade ago, when a dozen delisted their stock.

The private-sector Committee on Capital Markets Regulation also found that not one of the 20 largest global initial public offerings was listed in the United States in the first three quarters of 2007. In 2006, only one of the largest global IPOs listed on a U.S. exchange, and in 1996 eight of the 20 largest global IPOs listed domestically.

The percentage of IPOs by U.S. companies that listed only on a foreign exchange increased to 9.2 percent in the first three quarters of 2007. That is up from 6.3 percent in 2006 and 0.8 percent in the period 1996 to 2005.

"The willingness of U.S. companies to do their IPOs abroad is a strong indication of their concern with the burdens of the U.S. public market," the report said.

The U.S. Securities and Exchange Commission made it easier earlier this year for foreign companies to exit U.S. markets. Foreign companies could end their SEC registration if their shares' average U.S. daily trading volume over 12 months was 5 percent or less of their average daily worldwide trading volume.

Since then, dozens of foreign companies have announced plans to delist from U.S. markets, including German drugs and chemicals group Bayer BAYG.DE and French food group Danone

(DANO.PA).

"It is particularly distressing that a year after the committee sounded the alarm on our eroding competitiveness little has been done to address this problem," said Hal Scott, the committee's director and director of International Financial Systems at Harvard Law School.

"Our overall position is not improving and in some cases is getting worse."

The panel is co-chaired by Glenn Hubbard, a university professor who formerly headed President Bush's Council of Economic Advisers, and John Thornton, former president of Goldman Sachs Group (GS.N) and currently chairman of The Brookings Institution, a research and policy group.

In November 2006, the committee issued an interim report which found that the competitive position of the U.S. public equity markets was eroding.

"Since we first called for urgent action to address the problem in 2006, most measures either have continued to decline or failed to substantially improve," the report said.

The report warned that loss of U.S. market share in global trading volume and market capitalization could ultimately result in less liquidity in the U.S. market.

The report found that the ratio of American depositary receipt trading volumes in the United States to trading volumes of the underlying shares in the home country has remained at low levels. The ratio averaged 20.1 percent in the first three quarters of 2007. That was down from an average of 20.9 percent in 2001.

(Reporting by Rachelle Younglai; Editing by Tim Dobbyn)