Standards

US moves to overhaul "unnecessarily complex" regulation

The US Securities and Exchange Commission (SEC) is to establish an advisory committee to examine US financial reporting with a view to reducing unnecessary complexity and making information more understandable for investors.

Christopher Cox, SEC chairman, said: “Our current system of financial reporting has become unnecessarily complex for investors, companies, and the markets generally. The time is ripe to review how that system can be made less complex and more useful to investors”.

As part of this the committee will examine ways of providing more user-friendly disclosures to investors, including how technology can be used to allow shareholders access to their preferred indicators of company performance.
 

Meanwhile, Treasury secretary Hank Paulson announced plans designed to strengthen the US’ global competitiveness. The Treasury is examining the structure of the regulatory system for financial services providers and will announce its blueprint for reforms by early next year.

The President’s Working Group on Financial Markets is to collaborate with asset managers and investors to help define separate sets of best practices to address investor protection, enhance market discipline and mitigate systemic risk.

Paulson added that the Treasury supports efforts to encourage international investment opportunities by recognising comparable regulatory regimes, and is backing the SEC’s consideration of mutual recognition for foreign broker dealers and foreign exchanges offering services to US investors.

July 2007