Relax, just do it

The US has enjoyed a somewhat obsessive relationship with regulation since corporate scandals such as Enron, and more recently Amaranth, have created an over-protectionist environment for investors.

The proposed relaxation of regulation in the US has been a topic for some discussion over the past year but the opening up of the US securities framework by a number of policy shifts around Regulation S and transatlantic securities trading is something that we’re not used to.

Europe currently relies on tight US regulations to act as a barrier of entry for other players, however with the proposed changes the landscape will be leveled for US and European investors and US broker-dealers will be able to bypass local bourse members when accessing foreign exchanges. In addition, the qualifying period in which Aim-listed US-based company shares cannot be bought by US investors is being reduced to one year which could lead to more US companies being listed on Aim. While the regulatory landscape in the US will remain an obstacle to many US companies looking to raise capital in Europe, all of these moves highlight the trend of globalization as a wider theme of today’s financial markets. Relaxation of regulation will increasingly lend itself to investment diversification for US investors and not just sole exposure to the US market which at the minute looks like the economy closest to being on the brink of a recession.  

Such changes are also an interesting catalyst behind the likelihood of retail and institutional investors in the US becoming increasingly global, and the knock-on effect for domestic brokers. Will moves like this mean there will be no need for domestic brokers for the US institutional market? Only time will tell.