U.S. Securities and Exchange Commissioner Hester Peirce is pushing for securities cooperation between the United States and the Bank of England. The initiative would allow companies to test innovative financial tools in a controlled environment.
It would provide companies with access to technology, including distributed ledger technology (DLT), for their experiments.
Peirce, known for her vociferous support of cryptocurrency innovation, said in a statement on Wednesday that the initiative aims to test whether DLT can improve the efficiency of securities issuance, trading and settlement, while protecting investors, markets and financial stability.
“Experience in the U.K. and other countries has shown that such programs can help innovators ‘test their innovations in real-world conditions,'” she – she stated. “This can provide smaller, disruptive companies with a viable path to enter highly regulatedmarkets and compete with larger companies.”
The U.S.-British cooperation aims to simplify regulations in all jurisdictions
Under Peirce’s plan, companies could test their ideas with consistent regulations in both the US and the UK. This would eliminate the obstacle of navigating different regulations in each jurisdiction.
Participating companies would be free to choose the set of regulations under which they will operate. The environment also provides a valuable opportunity to identify and fix any design weaknesses.
The SEC plans to make the program available to most companies, except those with a history of wrongdoing. It will also solicit public input to establish a clear list of actions that can be tested. Participation in the program typically lasts two years.
Meanwhile, the SEC’s FinHub will assist companies in filing notices of participation and obtaining the necessary approvals for their experiments. Companies will have to publicly disclose their involvement in the program.
Fraud prevention measures and activity limits provide security
The SEC will oversee the entire program, applying existing anti-fraud regulations and setting limits on the range of activities allowed.
“While allowing companies to choose their own regulatory terms may raise concerns in some regulatory circles, companies would have to adhere to reasonable terms to maximize their chances for permanent relief or no-action relief,” Pierce said. “Companies would choose a regulatory regime that they believe protects investors and markets to maximize their long-term success with the Commission.”
Peirce has previously expressed her disapproval of the SEC’s reliance on executive action for regulation, particularly of cryptocurrencies. She has also criticized the long wait time for approval of investment instruments such as bitcoin ETFs.
She also advocated setting clear guidelines upfront, rather than relying solely on executive action after the fact. In her view, an emphasis on proactive regulation would foster innovation by allowing companies to have open discussions about compliance without fear of punishment.
