[A-List] Europe/US rivalry: stock exchanges

["Michael Keaney" <michael.keaney@xxxxxx>]

US may lift ban on European exchanges
By Francesco Guerrera in Brussels
FT.com
Published: October 11 2002 0:58 | Last Updated: October 11 2002 0:58

Harvey Pitt, chairman of the Securities and Exchange Commission, on Thursday
signalled the US was prepared to lift its long-standing ban on European
stock exchanges - a move that could trigger strong opposition in the US.

Mr Pitt told a conference in Brussels he was in favour of allowing European
exchanges to operate in the US, provided they offered only foreign stocks to
professional investors.

He said his staff had prepared a proposal on the issue and that the SEC was
due to make a decision shortly. "I believe any proposed relief should focus
on foreign exchanges that limit their US activities to offering foreign
securities to sophisticated US investors," he said.

European stock exchanges and the European Commission have long complained
about the ban, which they see as a protectionist measure to safeguard US
exchanges. Their opposition has been compounded by US exchanges' forays into
Europe in recent years.

Mr Pitt's comments came as he rejected calls from senior Democrats for his
resignation. Mr Pitt is at the centre of a storm over the appointment of a
regulator for the accountancy profession.

Separately, it emerged that the US was putting pressure on the European
Union to relax its new rules on large financial groups in exchange for a US
exemption for European companies and auditors from its own legislation.

The US authorities are concerned the EU rules would impose extra layers of
costly regulation on US companies with banking and insurance operations in
Europe.

They believe their concerns are similar to the ones expressed by the EU
authorities about the Sarbanes-Oxley Act, a new US law drawn up after the
Enron and WorldCom scandals.

The EU has urged the US to exempt European auditors from a provision in the
act that would put them under the control of US regulators. The Europeans
also want an exemption from a requirement for US-listed companies to have
only independent directors on audit committees.

The issue was at the centre of discussions between Harvey Pitt and European
Commission officials in Brussels on Wednesday.

Mr Pitt on Thursday expressed the SEC's "considerable concern" at the new EU
rules, known as the financial conglomerates directive. The directive could
"place [US financial groups] at a competitive disadvantage with
European-based firms", he said.

Under the proposal, agreed by EU governments in May, European regulators
could impose extra rules on US companies if they judge that US regulation is
not tough enough.

"At a time when we are carefully evaluating the impact of US rules and
regulations on foreign entities . . . the EC would do well to ward against
the possible extra-territorial imposition of standards on US firms," Mr Pitt
told an accountancy conference.