The U.S. Securities and Exchange Commission is providing more detail into plans to allow foreign brokers easier access to U.S. markets.

The SEC today published a proposed rule amendments to increase the range of services foreign broker-dealers are allowed to offer in the US. Earlier this week, the commission voted unanimously to issue the proposed rule amendments for comment.

The SEC’s proposals would effectively modify the requirement that any contact by a foreign broker-dealer with a U.S. institution must be chaperoned by a person registered with a U.S. broker-dealer. The proposed amendments would expand and streamline the conditions under which a foreign broker could operate without triggering the registration, reporting and other requirements that apply to broker-dealers that are not registered with the commission.

Under the proposals, foreign broker-dealers would be able to interact with U.S. institutional investors with at least US$25 million in investments, or individuals who own or control investments of more than US$25 million. Currently, foreign broker-dealers may only interact with institutions with financial assets of more than US$100 million.

In addition, the U.S. registered broker-dealer would play a more limited role in transactions involving foreign broker-dealers. U.S. broker-dealer personnel would no longer have to “chaperone” foreign broker-dealer personnel. The current chaperoning requirements have been criticized as impractical and as imposing unnecessary operational and compliance burdens, particularly for investors communicating with broker-dealers in time zones outside the US, the SEC notes.

“In practice, this chaperoning requirement has proven unwieldy as investors face significant inconvenience caused by differences in time zones and limitations on when investors can be contacted,” said SEC chairman Christopher Cox. “Further difficulties for U.S. investors arise because U.S. registered personnel have to be available for communications with foreign broker-dealers. Taken together, these limitations seriously hamper the service of U.S. investors, while making them pay for brokerage services twice. They also effectively limit U.S. investors’ access to certain foreign investments.”

In addition, the proposed rule would provide: a new exemption for transactions by foreign broker-dealers with any U.S. person that acts as a fiduciary of a foreign resident client, subject to certain conditions; a new exemption to allow foreign options exchanges to engage in limited efforts to familiarize qualified investors with their markets without triggering additional obligations for their foreign broker-dealer members; and, it would expand the category of investors to which a foreign broker-dealer could directly provide research reports.

Erik Sirri, Director of the SEC’s Division of Trading and Markets, added, “While the commission has provided a useful framework for U.S. investors to access foreign broker-dealers for almost two decades, ever increasing market globalization suggests that it is time to revisit that framework to consider whether it could be made more workable.”

The proposals are out for a 60-day comment period.