Securities and Exchange Commission chairman, Christopher Cox, and the European Commissioner for the Internal Market and Services, Charlie McCreevy, met in Washington, DC, today and outlined steps toward mutual recognition between the two regimes.

Following the meeting, Cox and McCreevy announced that they mandated their respective staffs to intensify work on a possible framework for EU-US mutual recognition for securities in 2008.

As a first step, SEC and European Commission staff, assisted by the Committee of European Securities Regulators, would need to develop a framework for mutual recognition discussions, they noted. The process will also require consideration of a fair and orderly methodology for initiating discussions with the EU and interested member states.

Cox and McCreevy agreed that the goals of a mutual recognition arrangement would be to increase transatlantic market efficiency and liquidity while enhancing investor protection. They noted that an EU-US mutual recognition arrangement for securities would have the potential to facilitate access of EU and US investors to a broader and deeper transatlantic market, increase the availability of information about foreign investment opportunities, promote greater diversification of securities portfolios, significantly reduce transatlantic trading and transaction costs, and increase oversight coordination among regulators.

They jointly declared, “The U.S. and EU, which comprise 70% of the world’s capital markets have a common interest in developing a cooperative approach to reducing regulatory friction and increasing investor access to investment diversification opportunities and enhancing investor protections. The concept of mutual recognition offers significant promise as a means of better protecting investors, fostering capital formation and maintaining fair, orderly, and efficient transatlantic securities markets. As we consider implementation of this concept, we encourage input from market participants.”

McCreevy and Cox agreed to work closely together during the year to review overall progress. In addition, SEC and European Commission officials and CESR staff plan to hold regular technical meetings over the year to begin to develop a mutual recognition framework.

In addition to the mutual recognition topic, the paid had a wide-ranging discussion on a variety of topics, including the current market volatility, accounting standards, sovereign wealth funds, credit rating agencies, and XBRL developments. With regard to the recent market movements, they discussed national and international efforts to analyze the circumstances resulting in the loss of market liquidity and mitigate its recurrence.