The study underscores the need for establishing a much more coherent and cost-efficient regulatory framework for wholesale transatlantic business in financial services.

The recommended areas for priority regulatory action are based on an independent regulatory analysis carried out by the leading global law firm, Clifford Chance LLP, which details the contrasting licensing and business conduct rules in respect of equities and equity derivatives of the EU (including France, Germany, Spain and the UK) with those of the US. It highlights the extensive duplication and regulatory conflict that exists in some areas and the subtle differences in approach in others. These can create considerable compliance problems and unnecessary cost for international financial service institutions and their customers.

The report argues for the formulation of a common set of customer definitions for the purposes of classification, solicitation and documentation; a common approach to core investor protection objectives such as "know your customer"; the development of a common set of examination and registration requirements; a consensual regulatory approach to other firms' outsourcing arrangements; and the development of a forward programme to simplify critical areas of regulation such as the obligation to deliver best execution, trade allocation procedures, distribution of research, etc. The report also urges that the process of rules' development should be underpinned by an agreed set of consensual US/EU principles of good regulation and a common approach to regulatory impact assessments.

The Participating Associations recognise and welcome particularly the recent initiatives by the Council of European Securities Regulators (CESR), the Commodity Futures Trading Commission (CTFC) and the Securities and Exchange Commission (SEC) to establish a process for greater consultation on rules' development; the recent initiative by the New York Stock Exchange (NYSE), the Securities and Investment Institute (SII) and the National Association of Securities Dealers (NASD) to establish common examination requirements for capital markets; and the increased priority that is now being given by governments and regulatory authorities in both the US and the EU to the transatlantic dialogue in financial services. The Participating Associations believe that the study sets forth a compelling "business case" for establishing a more coherent, effective and cost-efficient regulatory framework which will also have real benefits for consumers.

Anthony Belchambers, CEO, FOA, said: "This report demonstrates that the case for positive action to reduce the high degree of unnecessary complexity and duplication in the regulation of transatlantic financial services is now overwhelming. It also demonstrates the scale of the contribution that the industry is capable of making to the current dialogue. If the critically important economic and commercial objectives of facilitating innovation, enhancing efficiency and liberalising customer choice are to be achieved, then, as the market and trading environment has "gone global", so must the way in which it is regulated."

"Streamlining the cross-border regulation of equities and equity derivatives markets would lower the cost of trading and improve the market for financial service firms and their customers," said Beth Climo, executive director, ABASA. "We look forward to working with both domestic and international authorities to move this dialogue forward and improve the transatlantic regulatory environment."

"This report lays out an excellent case for better coordinating the regulation of financial services in the US and EU," said Cory Strupp, general counsel, BAFT. "The current regulatory approaches include unnecessary differences that are burdensome to financial firms that operate in both markets - imposing costs that ultimately are borne by customers - and that needs to change."

Ian Mullen, Chief Executive, British Bankers' Association said: "The BBA believes strongly that regulators and industry working together will produce better solutions than if they work apart. We hope that this report will help develop a fruitful transatlantic dialogue on the subjects raised in this report."

John Damgard, President, Futures Industry Association said: "Currently, firms trying to do transatlantic business face a myriad of confusing, inconsistent and conflicting regulatory requirements. Regulatory simplification and harmonisation, as we have proposed here, would have the benefits of lowering the cost of doing business and increasing competition on both sides of the Atlantic. This should result in better service for the many institutions trading equities and equity derivatives in our two markets."

Richard E. Thornburgh, chairman of SIA's International Advisory Council and Vice Chairman of the Executive Board, Credit Suisse First Boston, said: "Enhanced cooperation and understanding can be the basis to minimise regulatory differences and help make the transatlantic capital markets more efficient and accessible to investors and issuers. By detailing key industry priorities, this study is an integral part of that process. Uncoordinated regulatory approaches lead to new regulatory hurdles and barriers that raise costs for all market participants. By contrast, an integrated, transatlantic capital market is clearly in the best interests of all participants - investors, issuers, and intermediaries - as well as the global economy."

Volume I (The Industry Case for Priority Regulatory Action) and Volume II (Comparative Legal & Regulatory Analysis) of the report will be available in PDF format from the Participating Associations' websites from Friday 9 September 2005.