US, Australia ease barriers to each other's markets
WASHINGTON, Aug 25 (Reuters) - U.S. and Australian investors and traders will have easier access to each other's markets under an agreement revealed on Monday by U.S. and Australian securities regulators.
The U.S. Securities and Exchange Commission (SEC) and the Australian Securities and Investments Commission (ASIC) have agreed to recognize each other's market rules and allow certain banks, brokers and exchanges to do business more freely in the other's jurisdiction.
"Today's signing marks a significant milestone in our partnership with Australia to reduce the barriers that U.S. and Australian investors now face in investing in each other's markets," SEC Chairman Christopher Cox said in a statement.
The "mutual recognition" agreement provides a framework for the SEC and ASIC to provide exemptions that allow certain stock exchanges and brokers to operate in both jurisdictions without requiring them to be separately regulated in both countries.
The SEC has traditionally required foreign trading firms to comply with its rules even though they are fully supervised in their home market. The compliance is a costly and time-consuming process that discourages foreign trading firms from offering their services in the United States, which limits U.S. investors' options.
Under the agreement, Australian brokers who receive approval will have direct access to U.S. institutional investors. Australian exchanges that receive approval will have direct access to both U.S. institutional and retail investors.
The same access applies for U.S. brokers and exchanges.
The SEC and ASIC will begin considering exemption applications immediately, and could start issuing approvals in January 2009, the regulators said.
The agencies also signed a strengthened memorandum of understanding that will allow regulators to cooperate more on policy and enforcement issues.
ASIC Chairman Tony D'Aloisio said there is already a considerable flow of capital between the United States and Australia and that the agreement should only further encourage the investment.
"It should have a lower impact ... on the cost of capital," D'Aloisio said.
Australia is the first country with which the SEC has signed a mutual recognition agreement, and Cox said it will serve as a pilot exercise.
The SEC has been trying to ease restrictive international market rules through a mutual recognition plan it unveiled in March. The plan includes exploring initial agreements with the agency's foreign counterparts and potentially reforming rules.
If regulators are able reach a mutual recognition agreement, it would mark a radical shift in how those markets are overseen and would allow foreign banks, brokers and exchanges to operate under their home country's rules in another country.
The SEC in May said it was working with Canadian regulators, and has also said it is working with European regulators to strike such agreements. (Editing by Brian Moss)
