The North American Securities Administrators Association says that the current securities industry regulatory structure doesn’t need any major changes.

In a submission to the U.S. Department of the Treasury, NASAA voiced strong support for the current regulatory structure and cautioned against a significant overhaul in an effort to enhance the competitiveness of U.S. capital markets.

“The millions of investors in this country – for the most part hardworking, middle-class citizens, not Wall St. CEOs – deserve a much better justification for a regulatory overhaul if their financial futures are to be placed at risk,” said NASAA president and North Dakota Securities Commissioner Karen Tyler in a comment letter to the Treasury regarding its review of the regulatory structure.

“We look forward to working with the Department of Treasury to ensure that investor and consumer protections are not sacrificed in the name of regulatory reform,” she added.

NASAA said it favours prudent changes where necessary to preserve or enhance the health of the markets. “We have always been willing to discuss regulatory reforms that strike the appropriate balance between regulatory efficiency and protections for all investors,” Tyler wrote. “But regulatory reform, as the concept is currently framed, is neither. Our existing regulatory structure, particularly as it pertains to the securities markets, needs no fundamental restructuring. NASAA believes that pressuring for a significant overhaul of our current system at a time when our relationships abroad and our domestic economy are under extraordinary pressure is imprudent.”

The group maintains that the current system of regulation has allowed financial institutions to thrive, largely due to the high standards placed on prospective entrants as well as provisions for ongoing compliance, enforcement, and redress in the courts. “By fostering issuer and investor confidence, these regulations attract capital,” Tyler wrote. “Yet, because these strong investor protection measures are minimized by other major world markets in favour of concessions to the profit motive, the United States maintains its leadership position by a wide margin.”

NASAA noted that recent calls for regulatory reform share a universal set of “improvements” designed to ease perceived industry burdens. “Each reform package offers industry less bureaucracy, fewer constraints, and wide latitude in matters of conduct,” Tyler wrote. “We are troubled, however, by the lack of discussion about the effects of these reforms on the retail investor. We observe a lack of principle within “principled regulation” models that have nothing to say about investor protection.”

“We encourage the Treasury not to lose sight of the regulator’s primary function: to protect investors and capital. We believe that ‘regulatory reform’ should seek to ease needless burdens on market participants. It should aim to speed and improve understanding of and reaction to product and market innovations. Ultimately, we believe that any ‘reform’ should, as a matter of first principle, seek to maintain the critical balance required to protect investors and capital alike. Thus far, our adherence to this basic mission has forged the success of our markets,” Tyler wrote.

NASAA also defended the role of state regulators. “While there is a need to ensure that regulations are not literally duplicative, it seems to us unwise to artificially divide state and federal regulations based on system versus consumer protection when both are inextricably linked and states clearly have a compelling interest in all aspects of financial services regulation,” she said.

Cooperation between state securities regulators and the SEC, “works as a multiplier for efficiency and effectiveness,” she added.