Building the Financial System of the 21st Century: An Agenda for the EU and U.S.

Session I Regulatory Convergence in Transatlantic Capital Markets

3 of 14 Transatlantic Capital Market: Convergence vs. Divergence –Why is there Divergence? –What is Convergence? –Limits of Convergence

4 of 14 Why is there Divergence? –Institutional History · Domestic Economic Crises –Different Political, Legal and Cultural Systems –Different Local Geography –Different Stages of Economic Development –Protectionism –Regulators’ Turf · Trust / Distrust of Regulators in other Jurisdictions · Capture

5 of 14 What is Convergence? –Free Trade in Capital –Level Playing Field –Reduce Costs and Complexity –Avoidance of Regulatory Arbitrage –Facilitation of Best Practices

6 of 14 Limits of Convergence –One Size Does Not Fit All –Excessive Rigidity –Process Costs of Convergence –Complexity Costs of Convergence –Is MiFID an Example of too much Convergence? –Is the Accounting Roadmap an Example of Appropriate Convergence?

7 of 14 Roadmap for (More?) Convergence –Industry Initiative – Constructive Proposals –Regulatory and Legislative Dialogue –Political Will

8 of 14 Marketplace Consolidation Nasdaq / LSE –Who Cares? –What is the Structure of the Operating Model? (e.g. holding company model or integrated trading) –What are the Potential Benefits? –What are the Regulatory Constraints? –What are the Political Considerations? –Would Reciprocity – on practical terms – be Permitted?

Session II Current Issues Affecting the Regulation and Operation of the Asset Management Industry in the EU and the U.S.

10 of 14 Traditional Asset Management: U.S. – EU Critical Issues –Developments in the U.S. · Separation of Fund Management and Distribution · Merrill Lynch / BlackRock · What is the Growth Potential of the Asset Management Business? –Developments in the EU · Strong Growth Potential · Lack of Scale · Regulatory Barriers · UCITS: Single Passport for More Funds – Green Paper –Transatlantic · Are Hedge Funds Growing too Much?

11 of 14 Hedge Funds: Should they be Regulated? –Can We Regulate the “unregulated”? –Justifications for Regulation · Retail Investor Protection · Systemic Risk –What Type of Regulation? · Would Counterparty/ Prime Broker Regulation be Sufficient?

Session III Supervision of Cross-Border Activity of Banks and Insurance Companies

13 of 14 Financial Institutions Home – Host Issues –Role of National Interests · Intra – EU · EU – U.S. –Basel II · Different Approaches in Different Markets –Prudential Supervision in Insurance · Risk – Sensitivity in Insurance Regulation · Collateralization as a Trade Barrier