SEC, Australian Authorities Sign Mutual Recognition Agreement
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Washington, D.C., Aug. 25, 2008 (U.S. time) – Securities and Exchange Commission Chairman Christopher Cox, the
Australian Minister for Superannuation and Corporate Law – Senator Nick Sherry, and Australian Securities and
Investments Commission (ASIC) Chairman Tony D’Aloisio today entered into a mutual recognition arrangement between the
SEC, the Australian government, and ASIC. The mutual recognition arrangement provides a framework for the SEC, the
Australian government and ASIC to consider regulatory exemptions that would permit U.S. and eligible Australian stock
exchanges and broker-dealers to operate in both jurisdictions, without the need for these entities (in certain aspects)
to be separately regulated in both countries.
SEC Chairman Cox said, ‘Today’s signing marks a significant milestone in our partnership with Australia to reduce the
barriers that U.S. and Australian investors now face in investing in each other’s markets.
The framework we are establishing is designed to ensure that the significant protections afforded to investors under
each nation’s regulatory system are maintained and enhanced. An important part of this arrangement is strengthening the
ability of the SEC and ASIC to cooperate with each other in our enforcement and supervisory efforts, thereby enhancing
the integrity of both our markets.’
ASIC Chairman D’Aloisio said, ‘ASIC welcomes this opportunity to be included in the first mutual recognition arrangement
with the SEC and looks forward to strengthening the connections between the USA’s and Australia’s capital markets. This
arrangement reflects the importance of promoting the freer flow of capital in providing wider investment opportunities
for Americans and Australians where sound market integrity and investor protection regulatory regimes are in place.’
Through this mutual recognition arrangement, the SEC and the Australian authorities agree to consider providing
exemptions to exchanges and securities brokers in one another’s countries. Once implemented, these exemptions could
permit U.S. stock exchanges and broker-dealers regulated by the SEC, subject to conditions imposed by the Australian
authorities, to offer their services to Australian wholesale investors and financial firms without being subject to most
ASIC regulation. Likewise, eligible Australian stock exchanges and broker-dealers regulated by ASIC, subject to
conditions imposed by the SEC, could offer their services to certain types of U.S. investors and firms without being
subject to most SEC regulation.
Chairman D’Aloisio also noted, ‘This will give both Australian and U.S. investors easier and more competitive access to
each other’s markets, and will offer Australian market participants and U.S. broker-dealers new ways of doing business
with clients in each other’s markets.’
Ethiopis Tafara, Director of the SEC’s Office of International Affairs, added, ‘Over the past several years and
continuing to this day, there has been increased interest by U.S. investors in foreign securities. The SEC-Australia
mutual recognition arrangement recognises this investor interest and serves as a pilot exercise in building a
cross-border regulatory infrastructure to address the increasing globalization of our securities markets.’
An integral component of the mutual recognition arrangement is an Enhanced Enforcement Memorandum of Understanding (MOU)
and a new Supervisory MOU that will allow for considerably greater regulatory and enforcement cooperation and
coordination between the SEC and ASIC. These MOUs will apply broadly to all U.S. and Australian market activity and not
just those related to the mutual recognition arrangement.
Under the arrangement, both the SEC and ASIC will retain jurisdiction to pursue violations of their respective
anti-fraud laws and regulations.
Following today’s signing of the mutual recognition arrangement, the SEC and Australian authorities will begin
considering regulatory exemptions under the arrangement as they are submitted to the two agencies. It is expected that
the process of considering the initial applications for exemptions for approval by the authorities could be concluded in
early 2009.
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