The Securities and Exchange Commission and the British Financial Services Authority have signed a pact to share information that the agencies say will improve market oversight and supervision.

Tiner

A Memorandum of Understanding signed by SEC Chairman Christopher Cox and FSA Chief Executive John Tiner at a March 14 meeting will facilitate the exchange of confidential supervisory information currently collected by both regulators. Among other things, the arrangement provides for exchange of information about regulated entities and investment banking groups that operate both in the United States and the United Kingdom.

Cox said the agreement formalizes an already “robust collaboration” between the SEC and the FSA. “The additional tools for information exchange that we will gain from this arrangement will enhance our mutual ability to oversee the world’s largest securities firms and markets,” Cox said. He said the deal will also help the SEC in its new role as a consolidated supervisor of globally active U.S. investment banks.

Ethiopis Tafara, director of the SEC’s Office of International Affairs, said the pact represents “a new generation of cooperation between securities regulators,” and said the SEC plans to explore similar arrangements with other counterparts in the near future.

At that same meeting, a possible deal to join the London Stock Exchange, Europe’s largest stock market, with a top American market was also discussed, published reports say. According to those reports, SEC Commissioner Roel Campos said if a U.S. exchange did buy the LSE, any holding company owning the two would likely be mostly regulated by the SEC.

SEC’s Glassman Speaks Out On MD&A, 404 Exemption

Corporate issuers and their counsel got kudos from SEC Commissioner Cynthia Glassman recently for the improved state of Management’s Discussion and Analysis. In remarks before the Corporate Counsel Institute, Glassman noted that MD&A has improved in the three years since the Commission issued its interpretative release to provide principles-based guidance aimed at eliciting better disclosure.

When she became a commissioner four years ago, Glassman said, in many instances MD&A was “confusing and uninformative,” where management teams merely recited the numbers from the financial statements and disclosed percentage changes in financial statement line items from period to period.

Glassman

Three years and thousands of filings later, “generally, MD&A has improved,” Glassman said. Many companies are better explaining their financial statements, providing and clarifying context, and using MD&A to fill in some of the gaps in generally accepted accounting principles. In particular, she said, companies are making their executive summaries and results of operations more informative.

“I am encouraged that, consistent with our guidance, many companies are explaining why the results of operations are what they are—rather than merely repeating what GAAP says they are,” Glassman told the group. Still, she chided some companies for only doing an “elevator analysis” without ample explanation. Others’ MD&A is unnecessarily lengthy and not focused on telling the company’s story clearly.

Glassman also weighed in on the debate around the controversial proposed exemption for some smaller companies from Section 404 of Sarbanes-Oxley.

In a final report expected this month, an advisory committee to the SEC is expected to propose exempting the smallest public companies entirely from the requirements of Section 404 and exempting others from the external audit requirement.

“My current thinking is that it would be better to ensure that 404 is applied appropriately for all companies, and tailored if necessary, based on company size and complexity, than to exempt certain companies from 404 completely,” she said.

Commission To Hold Roundtables On Interactive Data

The SEC is planning a series of roundtable discussions later this year focused on speeding the implementation of new Internet tools to help investors and analysts get better financial information about companies and funds.

The agency is also seeking written feedback from investors, registrants, auditors and others on their experiences with interactive data.

Cox

Noting that it is within the SEC’s reach to get “dramatically more useful information in the hands of investors,” Chairman Christopher Cox said, “We look forward to these discussions on implementing interactive data initiatives that can benefit investors as quickly as possible, and we welcome the opportunity to learn from investors and other users of financial information how the SEC can improve our own disclosure program.”

The roundtables will review the experiences from the first year of a pilot program to use interactive data for company filings with the SEC. About a dozen companies participated in the voluntary program, testing the Extensible Business Reporting Language (XBRL). The SEC said the roundtables will use the lessons learned from the pilot program to develop new ways to get analysts and investors better information. Representatives from investors, issuers, auditors, analysts, technology professionals, regulators, and others will be invited to participate.

Topics will include: what investors and analysts want in interactive data; how to accelerate the use of new software that permits the dissemination of interactive financial data; and how to best design the SEC’s requirements for company disclosures.

The first roundtable, slated for June 12, will focus on how best to serve the needs of analysts and investors with interactive data.

The SEC seeks written feedback from investors, registrants, auditors and others on their experiences with interactive data and XBRL. Feedback on the use of interactive data submitted to the SEC will become part of the public record of the roundtables.

A form for providing feedback to the Commission, as well as related coverage and proposals, can be found in the box at right.