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Comparative Law and Regulation

The Office of International Affairs' (OIA) Comparative Law and Regulation unit advises the Commission and its staff on the international aspects of its decisions and rulemakings. It analyzes and assesses initiatives being undertaken in foreign jurisdictions that may impact the agency, US investors, US markets, as well as US market participants. Among other things, it advises the Commission on potential conflicts of law and identifies the impact that SEC rules may have on market participants - both US and foreign - that operate across borders.

Over the past decade, demand for this type of analysis has increased dramatically, as a result of several factors, including:

  • Rapid growth in the number of foreign private issuers (FPIs) during the 1990s;
  • New Sarbanes-Oxley requirements affecting these FPIs following 2002, some of which conflicted with foreign laws;
  • Rapid expansion of foreign operations of US-registered financial firms following repeal of Glass-Steagall Act in 1998 and new Dodd-Frank Act requirements affecting these firms; and
  • Following the global financial crisis in 2007, creation of new foreign financial laws that may affect US issuers and US-registered financial firms with operations abroad.

The Comparative Law and Regulation unit also advises the Commission and its staff on issues relating to regulatory coordination, particularly where an analysis of a foreign jurisdiction's laws regarding cross-border cooperation can enhance SEC supervision of regulated entities (both domestic and foreign). Please also refer to International Regulatory Policy.

Comparative Analysis

The Comparative Law and Regulation unit's analysis of approaches to regulatory issues is based on its examination of existing law, proposed changes to such law, and applicable international standards, some of which have been developed by the International Organization of Securities Commissions (IOSCO) or other international fora. The analysis is conducted to support the Commission's efforts to avoid unnecessary conflicts of law and alleviate unintended consequences that may result, and adversely impact investors, market participants and the SEC.

Specifically, OIA's Comparative Law and Regulation unit provides advice to the Commission by:

  • Analyzing the impact that SEC rules and actions might have upon foreign market participants active in US markets;
  • Advising of the manner in which SEC initiatives might affect cross-border activities of US issuers and US financial service providers;
  • Comparing regulatory approaches across jurisdictions;
  • Providing advice concerning the possible impact that foreign regulators' proposed rules and policy initiatives might have on the SEC, US investors, the US market, and US market participants;
  • Examining the work of international standards-setting bodies such as IOSCO, where knowledge of regulatory differences across jurisdictions can help forge an international consensus-driven approach to cross-border regulatory issues in ways consistent with the Commission's policy objectives; and,
  • Negotiating information sharing arrangements with foreign counterparts for the purpose of enhancing cooperation in the supervision of globally active market participants.

The Dodd-Frank Act

The advice of the Comparative Law and Regulation unit has been increasingly needed as a result of the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act). Given the cross border implications of many of the SEC's rulemaking initiatives under the Dodd-Frank Act, the Comparative Law and Regulation Unit analyzes the areas in which new SEC rules may intersect with foreign laws or have an impact on foreign market participants active in the United States securities markets.

In addition, the Dodd-Frank Act directs the SEC to consult with its foreign counterparts in several key areas (see, e.g., Section 752) and study how different countries regulate certain activities implicated in the recent financial crisis (e.g., Section 719). Consistent with these statutory provisions, OIA staff leads cross-divisional analyses on international issues, in which Comparative Law and Regulation operates as a central SEC-wide "node" for analyzing how new SEC rules may intersect with foreign laws or have an impact on foreign market participants active in the US securities market or US market participants operating in foreign markets. One of the objectives is to help craft common approaches to common regulatory issues within the SEC, for example, where those issues may involve different types of market participants, regulated by different SEC divisions and offices.

Foreign Regulatory Reform Efforts

The Comparative Law and Regulation unit monitors regulatory reform efforts in foreign jurisdictions to alert the Commission of potential conflicts and opportunities for cross-border coordination of issues arising from differing regulatory approaches. Comparative Law and Regulation, along with other units in OIA, helps coordinate SEC policies with these foreign counterparts, where appropriate, in order to provide better cross-border oversight of globally active market participants and prevent unnecessary regulatory conflicts.

As part of its analysis of foreign laws and regulations, Comparative Law and Regulation also identifies for the Commission the various approaches taken by foreign jurisdictions to address regulatory issues similar to those that concern the SEC. This type of identification and analysis potentially alerts the Commission to different options when it is considering its own solutions to these issues, and provides the Commission with information about the strengths and weaknesses, in practice, of these varying approaches to common regulatory concerns.

Modified: 10/16/2014