STRAT
26-08-2008, 02:42 PM
US investors get direct access to local shares
Scott Murdoch | August 26, 2008
THE liquidity of the Australian financial markets will be deepened under a new plan struck by the Government to allow Wall Street investors to buy domestic stocks directly.
After three years of negotiation, a deal of "mutual recognition" was signed overnight in Washington DC by the Australian and US financial and corporate regulators.
Under the agreement, the Australian Securities Exchange (ASX) can place trading screens in the offices of US firms to allow the overseas brokers and dealers to become direct participants in the Australian market.
The international brokers will then be able to market ASX stocks to retail and wholesale investors in the US.
Investors in Australian and US securities will be bound by the regulatory regimes of the home exchange of where the shares are registered.
For instance, Australian buyers of US stocks will have to comply with Australian regulations, and not US rules.
"The arrangement will provide greater access to US markets for Australian investors while maintaining strong investor protection and ensuring market integrity," a statement from the Prime Minister and the Treasurer said.
"It will also make Australian markets more attractive and accessible to investment from theUS.
"This will mean that retail investors in Australia will be able to access the US market directly through the Australian brokers and enjoy Australian regulatory protection."
A number of investment banks have for years run Australian dealing desks out of their London and New York offices.
"The arrangement will also help reduce red-tape and compliance costs as brokers and markets will primarily only have to comply with one substantive set of regulations -- in their home jurisdictions," the statement said.
The plan was first raised by former treasurer Peter Costello in a bid to open up the Australian capital markets.
It was one of the initiatives first negotiated under the free-trade agreement between Australia and the US.
There was some thought in Canberra when the plan was launched that it was a bid by the former government to bolster support for the Telstra 3 float.
The deal was signed overnight by Labor's Corporate Law Minister, Nick Sherry, ASIC chairman Tony D'Aloisio and the Securities and Exchange Commission's chairman, Christopher Cox.
It is the first arrangement the US has put in place, whereas Australia has similar arrangements with Hong Kong and New Zealand.
The mutual recognition arrangement will not cover initial public offerings (IPO) or
prospectuses. The deal will also not increase the access of Australian companies to dual-list in New York.
The current regulatory set-up now means that ASX-listed stocks cannot be traded among US institutional investors without a US broker-dealer being involved in the transaction.
Similarly, retail investors cannot buy ASX stocks in the US unless a prospectus for the shares has been registered with the SEC. The Government says the changes to the investment rules will deepen the liquidity of the Australian market.
Scott Murdoch | August 26, 2008
THE liquidity of the Australian financial markets will be deepened under a new plan struck by the Government to allow Wall Street investors to buy domestic stocks directly.
After three years of negotiation, a deal of "mutual recognition" was signed overnight in Washington DC by the Australian and US financial and corporate regulators.
Under the agreement, the Australian Securities Exchange (ASX) can place trading screens in the offices of US firms to allow the overseas brokers and dealers to become direct participants in the Australian market.
The international brokers will then be able to market ASX stocks to retail and wholesale investors in the US.
Investors in Australian and US securities will be bound by the regulatory regimes of the home exchange of where the shares are registered.
For instance, Australian buyers of US stocks will have to comply with Australian regulations, and not US rules.
"The arrangement will provide greater access to US markets for Australian investors while maintaining strong investor protection and ensuring market integrity," a statement from the Prime Minister and the Treasurer said.
"It will also make Australian markets more attractive and accessible to investment from theUS.
"This will mean that retail investors in Australia will be able to access the US market directly through the Australian brokers and enjoy Australian regulatory protection."
A number of investment banks have for years run Australian dealing desks out of their London and New York offices.
"The arrangement will also help reduce red-tape and compliance costs as brokers and markets will primarily only have to comply with one substantive set of regulations -- in their home jurisdictions," the statement said.
The plan was first raised by former treasurer Peter Costello in a bid to open up the Australian capital markets.
It was one of the initiatives first negotiated under the free-trade agreement between Australia and the US.
There was some thought in Canberra when the plan was launched that it was a bid by the former government to bolster support for the Telstra 3 float.
The deal was signed overnight by Labor's Corporate Law Minister, Nick Sherry, ASIC chairman Tony D'Aloisio and the Securities and Exchange Commission's chairman, Christopher Cox.
It is the first arrangement the US has put in place, whereas Australia has similar arrangements with Hong Kong and New Zealand.
The mutual recognition arrangement will not cover initial public offerings (IPO) or
prospectuses. The deal will also not increase the access of Australian companies to dual-list in New York.
The current regulatory set-up now means that ASX-listed stocks cannot be traded among US institutional investors without a US broker-dealer being involved in the transaction.
Similarly, retail investors cannot buy ASX stocks in the US unless a prospectus for the shares has been registered with the SEC. The Government says the changes to the investment rules will deepen the liquidity of the Australian market.