International Regulation?  Everyone Agrees, But Devil is in the Details

At the Securities Industry and Financial Markets Association Annual Meeting, New York.

NYSE CEO Duncan Niederauer and NASDAQ CEO Robert Greifeld are often at odds, but they delivered very similar remarks in back-to-back speeches at the securities industry conference this afternoon.

Their theme: the financial markets are so intertwined that the only effective regulation has to be global.

Greifeld in particular emphasized that reforms could not be considered in a merely national context, and that dramatically different levels of regulation had created a "national arbitrage" where various securities were created in one country where regulation was different than other countries, but then sold everywhere around the world.

This theme was echoed by Niederauer. While both talked about the need for additional regulation, Niederauer said he was not interested in "son of Sarbanes-Oxley," the 2002 law enacted in the wake of the corporate and accounting scandals that introduced new (and many argue overly onerous) accounting and other standards to U.S. corporations.

Many, including Niederauer, feel that law has put the U.S. at a competitive disadvantage internationally and that many companies have chosen to list in London, where regulations are more relaxed, than in New York.

During the Q & A, I asked Greifeld how this regulation could be accomplished in practice. For example, while international regulation of banking laws might seem desirable, I noted that no one I had spoken to at this conference was in favor of allowing regulators in Brussels to regulate U.S. banks.

Greifeld agreed, but said that each country would have to give up something to achieve the goal.

Odds 'n ends:

--When all else fails, blame the media. Niederauer drew the only round of laughter and applause in the two rather somber speeches when he told of a CNBC appearance during the height of the market chaos a few weeks ago where Maria and Dylan asked him if there was any truth to the rumors that the NYSE might close at any time. No, he said, the NYSE was not closing at any time, but then he went on to suggest that it might be good if CNBC might close for a few days.

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