A group of British and American securities industry trade associations are calling for greater convergence in the regulation that governs the transatlantic wholesale business.

The trade groups announced the publication of a study which calls for regulatory convergence of the transatlantic markets. They note that the study underscores the need for establishing a much more coherent and cost-efficient regulatory framework.

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 program to simplify critical areas of regulation such as the obligation to deliver best execution, trade allocation procedures, and distribution of research. The report also urges that the process of rules’ development should be underpinned by an agreed set of consensual U.S./EU principles of good regulation and a common approach to regulatory impact assessments.

The recommended areas for priority action are based on an independent regulatory analysis carried out by the 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 U.K.) with those of the U.S. It highlights the extensive duplication and regulatory conflict that exists in some areas and the subtle differences in approach in others.

The list of participating associations includes the ABA Securities Association, the Bankers’ Association for Finance and Trade, the British Bankers’ Association, the Futures Industry Association, the Futures and Options Association and the Securities Industry Association.

Together, they also welcome the recent initiatives by the Council of European Securities Regulators, the Commodity Futures Trading Commission and the Securities and Exchange Commission to establish a process for greater consultation on rules’ development; the recent initiative by the New York Stock Exchange, the Securities and Investment Institute and the National Association of Securities Dealers 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 U.S. and the EU to the transatlantic dialogue in financial services. The associations say they 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.

“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.”

John Damgard, president of the 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.”