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Mutual Recognition of Cross-Border Financial Services Regulation

In an address by Dr Ken Henry, Secretary to the Treasury, to the ASIC Summer School he outlined the Treasury?s perspective on the important policy issues associated with the mutual recognition of securities regulation generally and, specifically, with the United States and New Zealand.

Dr Henry discussed the importance of global finance markets to Australia and Australia?s approach to the regulation of cross border securities regulation.

To date, six overseas markets, including the Chicago Board of Trade and the Chicago Mercantile Exchange have been granted licences to operate in Australia.

In respect of foreign financial service providers, "the Corporations Act also requires a person who carries on a financial services business in Australia to hold an Australian Financial Services Licence ... An exemption may be provided if the foreign financial service provider is regulated by an overseas regulator and the financial services on offer are already prescribed as being suitable for an exemption.

As at May 2007, there were 289 foreign financial service providers, including 132 entities from the United States, with an exemption."

Dr Henry also discussed mutual recognition of Australia ? New Zealand securities offerings:

On 22 February 2006 the Governments of Australia and New Zealand signed a treaty on the Mutual Recognition of Securities Offerings.

This regime is expected to come into effect early this year. It will allow an issuer to extend an offer that is being made lawfully in one of the countries to investors in the other, host, country without having to comply with most of the substantive requirements of the host jurisdiction?s fundraising laws applying to domestic offers.

The practical effect is that the one prospectus may be used in both countries, reducing compliance costs and furthering the integration between the two markets."

Full post as published by Australian Regulatory Compliance Review on February 23, 2008 (boomark / email).