There’s no shortage of agitation over US regulation driving up costs for public companies. The US Chamber of Commerce recently added weight to those charges with a report highlighting the growing popularity of overseas exchanges and warning that US markets are losing their edge.
The chamber has also launched a Center for Capital Markets Competitiveness (Ccmc), with Michael Ryan as executive director. A former executive vice president and general counsel at the American Stock Exchange, Ryan has served as counsel to the chairman of the National Association of Securities Dealers and was a senior attorney at the Sec.
Why has the chamber decided to launch this effort now? The chamber is increasingly hearing concerns from our members, from all different corners, about the competitiveness of our capital markets. Last year we launched a capital markets committee and found very strong reasons to be concerned.
For 60-70 years, the only real place to raise capital was the US. In the last decade or so, however, the markets in London and Hong Kong in particular have developed infrastructure to support meaningful activity. They have liquidity, they have clearance and settlement systems in place, and their legal and regulatory frameworks provide much greater stability than in the past.
Are foreign markets less strict? In London, there is a much more streamlined regulatory process. All of the regulators are housed in one entity, the Financial Services Authority, and there’s a widespread view that they are marching to the same drum. To be sure, there are a significant number of rules – 600 pages of them – but it’s a more principles-based approach to oversight of markets. It’s very clear the UK regulators see their role as facilitating the development of industry; there’s a sense that it’s more adversarial here in the US. What’s next for the Ccmc?
It is fair to say we are stepping up the pace and focus. We will work with Capitol Hill, the Sec and other trade groups to push the agenda. I think the resources that will be put into this will certainly be in the millions. What is at stake here?
If a significant number of companies move overseas, it raises the cost of capital and makes it more expensive for US investors to access investment opportunities. If the cost of business goes up, standards of living go down or stagnate. You won’t have to look very far to see the ripple effects.
