Nazareth: Mutual recognition bad for retail

Allowing foreign brokerage firms to do business directly with U.S. investors would raise “serious investor protection concerns,” said SEC Commissioner Annette Nazareth.

Allowing foreign brokerage firms to do business directly with U.S. investors would raise “serious investor protection concerns,” said SEC commissioner Annette Nazareth.
Ms. Nazareth, speaking at the Securities Industry and Financial Markets Association annual meeting today in Boca Raton, Fla., said regulators should allow foreign firms to deal directly with large, sophisticated U.S. investors.
But she warned about allowing foreign firms to target retail investors here.
Such a move “would preempt FINRA and state oversight,” she said.
“It could also raise competitiveness issues for U.S. firms” if less-regulated competitors were allowed in.
The SEC has been working on the idea of striking “mutual recognition” deals with foreign regulators to ease cross border trade.
Exemptions from U.S. registration would be given to foreign firms and exchanges if their home jurisdictions had comparable regulatory regimes.
“I’m more comfortable now than ever before that [foreign] regulatory regimes are comparable to ours,” Ms. Nazareth said.
But “it strikes me as ill-advised to set out a full mutual recognition scheme for [retail] brokers,” she said.