In remarks prepared for a conference in Brussels, Belgium tomorrow, SIA Chairman Richard E. Thornburgh said that two European Union directives, while fundamentally sound, must be amended to avoid harming Europe's capital markets.
The first, the Transparency Obligations Directive, would require non-EU issuers to use two different accounting methods if the EU does not recognize domestic accounting requirements as "equivalent" to those of the International Accounting Standards Board. Unless the EU recognizes U.S. Generally Accepted Accounting Principles to be equivalent to those of the IASB, Thornburgh said, "There could be major damage to European capital markets - diminished liquidity, reduced investor choice and less appeal to non-EU country issuers."
The second, the pre-trade transparency provisions of proposed Investment Services Directive, Thornburgh said, fail to adequately account for investors' need for liquidity and for varied and tailored types of trading. These provisions "could actually diminish investor choice by forcing trading back onto exchanges or, even, away from Europe altogether," Thornburgh said.