June 13, 2006
NYSE Takeover of Euronext: Implications for Compliance
Marshall McLuhan (he of "The medium is the message" fame), once said that "The new electronic independence recreates the world in the image of a global village".
Most investors have traditionally had a bias towards their home markets. This is going to change dramatically over the next few years as McLuhan "global village" analogy becomes real.
So, consider the implications of the integration of international trading markets, such as NYSE acquiring Euronext, that is underway and the upcoming impact on national regulatory structures and compliance standards.
Some trends are clear:
Most investors have traditionally had a bias towards their home markets. This is going to change dramatically over the next few years as McLuhan "global village" analogy becomes real.
So, consider the implications of the integration of international trading markets, such as NYSE acquiring Euronext, that is underway and the upcoming impact on national regulatory structures and compliance standards.
Some trends are clear:
- The push for common accounting and compliance standards around the world will only increase. Investors will want assurances that they can interpret financial information in a consistent manner. There will be lots of nationalism about the superiority of one set of regulatory approach over another. However look at what is already happening with the implementation of IFRS in Europe. Commentators are even saying that SOX facilitates aspects of IFRS.
- Technology infrastructures will be integrated over time in order to reduce transactions costs and to provide investors and issuers with integrated and transparent investing platforms.
- The world is becoming a small place. If an investor in the U.S. chooses to invest in an exchange that has lax, or "flexible", compliance standards and suffers losses because of improper reporting, etc, who will the investor turn to for comfort. Probably not the SEC. However, if an exchange promotes its offerings heavily to U.S. investors will U.S. regulations apply? Only time will tell.
The SEC issued a Fact Sheet on Potential Cross-Border Exchange Mergers today - Click here for more information.
Marshall McLuhan would chuckle.
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