SEC's Christopher Cox Wants to Globalize Regulation

Last Updated Apr 7, 2008 12:35 PM EDT

Executives are getting washed over with media coverage about the new financial regulatory blueprint spearheaded by Treasury Secretary Henry Paulson. Cries may be loud about the need for new oversight but one Paulson message stands clear: U.S. business must remain competitive in an increasingly global economy.

Executives have heard that mantra for years. Yet ironically, one of the very agencies that Paulson wants to make over, if not eliminate, is the U.S. Securities & Exchange Commission. Its boss, Christopher Cox, is well in tune to the need for thinking globally. He's been on a tear boosting better cooperation with other regulators and is seeking converging world accounting standards.

One reason for the global attention is that foreign executives and regulators were miffed that the Sarbanes-Oxley law threatened their turf. Cox is trying to smooth things over.

Consider some facts from the SEC:

  • In India, the SEC and the Securities & Exchange Board of India (SEBI) are working to improve trading information and enforcement. Indian stock markets are among the hottest in the world, having seen their shares rise more than 25 percent last year.
  • With SEC help, the China Bank Regulatory Commission is launching mutual funds that Chinese banks can use to draw some as much as $2.4 trillion in possible savings by ordinary Chinese into U.S. stocks.
  • The European Commissioner for Internal Market and Services (CESR) of the European Union has agreed to work with the SEC for mutual recognition in securities markets. The SEC, for example, has already agreed to no longer require the "reconciliation" of audits done under European standards to sell securities in the U.S.
  • The Australian Securities and Investment Commission and Treasury Department have agreed to discuss cross-border regulation and a regime for mutual recognition of securities markets.
  • The SEC is pushing to allow U.S. companies to decide for themselves if they want to use International Financial Reporting Standards for accounting used by most of the world's companies instead of the U.S Generally Accepted Accounting Principles (GAAP) used my most U.S. firms.
Regardless of whether Paulson gets to reconstruct financial regulation his way or not, growing globalization is undeniable.