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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Closing Remarks at the 2006 International Institute for Securities Market Development


Chairman Christopher Cox

U.S. Securities and Exchange Commission

Washington, DC
April 27, 2006

Good afternoon. Thank you for your participation in what we all agree has been an absolutely outstanding 2006 International Institute for Securities Market Development. It is indeed a pleasure to join you. The last 10 days have been truly fascinating.

And what an extraordinary group of leaders we have assembled here. You've heard from more than 100 people in less than two weeks. You've had quite a run here, and accomplished a great deal.

I've kept up with your program, and I want you to know — I've certainly learned a lot. I've benefited immensely from mingling with you during your breaks from the action.

Even though these comments here are billed as "concluding remarks" I am by no means bidding you good-bye.

The whole point of this exercise is to make sure that we do not lose sight of each other, but rather that we build on this relationship and stay in touch.

Precisely because the world of finance knows no borders today, our world of securities regulation must transcend national borders as well.

The good news is that we have better tools to keep in touch than ever before in human history. Since we all spend so much time on the Internet, we should barely notice the difference between speaking to our colleagues in New York and our counterparts in New Delhi.

Just consider, when you're thinking of how connected we might become, that already 75% of Americans spend an average of 25% of their waking hours online.

And in cyberspace there are no passports. It is truly an empire upon which the sun never sets. This has certainly changed the job of the Chairman of the SEC. At night I start getting messages from Asia, and in the morning, it is Europe that is five or six hours ahead — and doesn't care if I haven't had time to get dressed yet.

This 24-hour, international culture has had an enormous impact on the way we view our horizons. Just this month the American search engine company Google purchased a new search algorithm created by an Israeli student at the University of New South Wales in Australia.

Only in a handful of corners of the world, like Cuba and North Korea, do citizens lack the right to have access to the World Wide Web. The rest of the world is wired, and increasingly so, because governments realize that the Internet is where supply satisfies demand.

Those governments that allow access to the Internet because they like the economic impact, but want to limit the expansion of ideas they find threatening are fighting a losing struggle. You can't be just a little bit wired.

It is of the utmost importance for us financial market regulators from all over the world to understand the new realities. Our jobs are by nature national — we generally claim jurisdiction only over companies whose shares trade on our markets.

But companies, capital and people live less and less within national limitations. Of Adam Smith's factors of production, only land remains immobile. That one will be difficult to change. But the rest will travel.

So we cannot let up on our job of investor protection, but we also have to be mindful of the fact that we now inhabit a world filled with new opportunities, and new challenges.

Accounting presents one such challenge. Its rules are defined by levels of development, national history and, ultimately, culture. These realities change only very slowly.

Still, before the end of this decade, fully one 1,000 of the 1,200 foreign private issuers in the United States will be using International Financial Reporting Standards as their accounting standards.

And, indeed, we want to facilitate trans-border activities — we want our companies to become more nimble, productive and creative.

Technology is making this problem simpler, too. Interactive data will make it possible to fly above some of the problems one encounters when reconciling different accounting standards. That is because it tags data in financial statements, making it possible to arrange and rearrange information with the click of a mouse.

The twin revolutions we've experienced in the past quarter century — one political, the other technological — have given birth to the truly global economy we see today.

And what better evidence of all this ferment than the people right here in this room. Just looking at the participants at this Institute one can't help but marvel at what our world has become.

The participants here literally represent an A to Z of the world's peoples, from Albania — no longer under the boot of Enver Hoxa — to Zambia. The list passes through China, through Estonia, India, Mongolia and Romania.

Of all these countries I have just mentioned, only India — with an exchange first founded in 1877 — had a stock market just 20 years ago. In the past two decades, the capitalization of India's market has gone from $14 billion to roughly half a trillion. And in that time, all of you have adopted markets. Your presence here attests to this incredible fact, and also to your governments' desires to see markets prosper.

As the number of exchanges has multiplied, we have noticed an attendant explosion in diversity that has led, ironically, to even greater integration and convergence.

Price movements in the past 20 years reflect the emergence of high global equity correlation. This makes one conclusion ineluctable: large capital flows have led to e pluribus unum — out of many one. Ours is now truly a global market.

Which shows us once again how important it is for us securities markets regulators to talk to one another. What we do here will have a tremendous impact in Ulan Bator and Tallinn, London and Tokyo. And what happens in Iceland will boomerang here.

As our Director of International Affairs, Ethiopis Tafara, said when he welcomed you to this conference two weeks ago, the spread of markets has brought other benefits, among them the strengthening of property rights and of the rule of law, in our case securities law. Together we can make these even stronger.

In our world, we depend on one another, and our citizens depend on us.

Thank you for what you do, and thank you for coming.


Modified: 05/01/2006