Edited by Kern Alexander and Rahul Dhumale
Chapter 8: Transatlantic Convergence of Financial Regulation: A European Perspective
Klaus R. Ilmonen Editors’ abstract: Klaus Ilmonen reviews recent EU and US securities regulatory initiatives in promoting transatlantic coordination in the application of international financial reporting standards and exempting non-US broker-dealers from selling securities of non-US issuers to accredited US investors. He reviews US regulatory practice of allowing EU-based firms to demonstrate to the Securities and Exchange Commission that they comply with IFRS, rather than US GAAP, before offering securities to US investors. He argues that the changing structure and dynamics of global securities markets necessitate the adoption of alternative regulatory approaches and principles, including a limited form of mutual recognition in favour of jurisdictions with equivalent regulatory standards and which subject broker-dealers to the regulatory controls of the host jurisdiction where they sell securities. His analysis incorporates not only the views of EU and US regulatory officials, but also draws on the reports of professional and industry bodies. He suggests that the trends of mutual recognition and cross-border enforcement will require enhanced coordination in regulatory standard setting between EU and US authorities, especially in light of the lessons learned from the financial crisis regarding the need to control systemic risk. INTRODUCTION The convergence of financial regulation in the United States and the European Union was subject to increasing interest in the years preceding the financial crisis, and significant regulatory initiatives have been introduced in this regard on both sides of the Atlantic by market participants and regulators alike.1 For example, in late 2007 the SEC announced its initiative to...
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