FESE welcomes the SEC’s current initiative to amend its Rule 15a-6 which, if the amendments are adopted by the SEC, would broaden access to European-based brokerage services across the Atlantic and increase US wholesale trading on Europe’s regulated exchanges. We especially welcome the proposed reduction to USD 25 million in the threshold level of assets that a qualified US investor must have to invest, the improved terms under which foreign broker-dealers might solicit US qualified investors, and the proposals regarding the options exchanges’ ability to familiarize their investors with their products and services.
Important as it may be, this step will not be sufficient by itself for US wholesale investors to derive the full benefits of streamlined access to the transatlantic marketplace. This is because the proposed reform does not tackle the current regulatory imbalance which allows only foreign broker-dealers to provide US investors with direct access to European securities exchanges. It will allow some new non-US broker-dealers to enter the market, but will not allow US broker-dealers to provide the same services to US investors without unnecessary costs.
Therefore, as a valuable complement to the current reform, we urge the SEC to give US broker-dealers the opportunity to access foreign markets directly, and thus allow them the same ability as their foreign counterparts to provide transatlantic services to their customers.
This would be achievable by exempting foreign exchanges from exchange registration obligations so that they can connect US broker-dealers to their trading systems without triggering onerous and duplicative requirements. Establishing this regime for the same category of US investors and in the same timeframe as the revision of Rule 15a-6 would ensure that US investors benefit from a complete reform package that will broaden choice and reduce costs for US investors by providing access to EU markets through US broker-dealers.
For similar reasons related to a level playing field, we also support the SEC on its initiative to streamline procedures for filing and seeking approvals of rule changes.
Last but not least FESE welcomes the proposal regarding the ability of non-US options exchanges to familiarize US entities with their markets and products and, in particular, their OTC options processing services.
As soon as possible after these short-term reforms, we strongly encourage the SEC to establish a mutual recognition framework between the EU and the US, encompassing securities exchanges and extending the benefits of a more integrated market to broader categories of investors. As is the case with the Australia-US framework recently agreed, this regime should provide many more US investors the opportunity to access the European markets via SEC-regulated broker-dealers.
