Stock exchange rules may be harmonized
Apr 27, 2007
Australia proposes mutual recognition of exchange regulations with US
SYDNEY -- Australia's Federal Treasurer Peter Costello has announced a plan to harmonize Australian and US stock exchange rules. If the plan goes ahead, in future it should be easier for Australian companies to have a secondary listing in the US as they will no longer have to comply with two sets of regulations.
Christopher Cox, chairman of US regulator the SEC met with Costello in early April, and has announced immediate plans to establish a joint committee to explore the possibility of mutual recognition of stock exchange regulations between Australia and the US.
The agreement might also mean Australian and US stockbrokers will be able to trade on each other's exchanges on behalf of clients.
The move has been met with broad approval by Australia's IROs. 'Harmonization is a good thing,' says Ronn Bechler, group manager of investor relations at life insurance and wealth management firm Axa Asia Pacific Holdings. 'Mutual recognition of Australian Stock Exchange listing rules would certainly assist those companies looking to tap into US capital markets.'
But some Australian IROs are not so sure mutual recognition will make it easier for Australian companies to access US capital. 'Harmonizing listing rules may go some way toward making it easier for Australian companies to list in the US, but compliance with Sarbanes-Oxley could still make the regulatory environment in the US a challenging place to raise capital for Australian stocks,' says Katherine Cooper, investor relations manager at clothing and home wares manufacturer Pacific Brands.
Several commentators have also noted that Australian companies can already access US capital through the Asian franchises of the major US fund managers, and don't necessarily need a secondary listing to raise capital from US investors.