The SEC has signed an agreement with Australian securities regulators to pave the way for U.S. and Australian stock exchanges and broker-dealers to operate in both jurisdictions without being separately regulated in both countries—yet another step in the SEC’s vision of fewer barriers to global capital markets.

The Aug. 25 agreement provides a framework for the SEC, the Australian government, and Australian Securities and Investments Commission to consider regulatory exemptions that would permit U.S. and eligible Australian stock exchanges and broker-dealers to operate in each other’s jurisdictions. If approved, such exemptions would mean Australian stock exchanges and broker-dealers regulated by ASIC could offer their services to certain U.S. investors and firms without being subject to most SEC regulation, and vice versa.

The SEC has sharpened its focus on mutual recognition in recent months as interest among U.S. investors in foreign securities has increased and cross-border consolidation of stock exchanges has accelerated. Efforts are underway to develop a mutual recognition agreement with Canada’s council of securities regulators.

SEC Chairman Cox said the agreement “marks a significant milestone in our partnership with Australia to reduce the barriers that U.S. and Australian investors now face in investing in each other’s markets.”

Ethiopis Tafara, director of the SEC’s Office of International Affairs, said the agreement with Australia “serves as a pilot exercise in building a cross-border regulatory infrastructure to address the increasing globalization of our securities markets.”

The agreement includes an Enhanced Enforcement Memorandum of Understanding and a new Supervisory MOU to allow for more regulatory and enforcement cooperation and coordination between the two regulators. The SEC and ASIC will retain jurisdiction to pursue violations of their respective antifraud laws and regulations.

SEC and Australian authorities will consider regulatory exemptions under the arrangement as they are submitted. Cox noted that any proposed SEC exemptive orders would be put out for notice and comment before the commission would vote to approve them. He said exemptions could be granted as soon as January 2009.

Related Resource: Video of SEC, Australia Press Conference (Aug. 25, 2008)Related Coverage: SEC & Australia Talk Mutual Recognition (April 8, 2008)