To Eliminate the Exemption From State Regulation for Certain Securities Designated by National Securities Exchanges

Floor Speech

TO ELIMINATE THE EXEMPTION FROM STATE REGULATION FOR CERTAIN SECURITIES DESIGNATED BY NATIONAL SECURITIES EXCHANGES -- (House of Representatives - October 23, 2007)

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Mr. MEEKS of New York. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I have been a major advocate of making sure that America maintains its global competitive edge whether it is in business or human development. America must stay at the forefront of innovation, productivity and expertise. No matter how economically, militarily or culturally strong a Nation has become, it will certainly begin its decline when it rests on the laurels of its past accomplishments and ceases to stay ahead of the competition.

H.R. 2868 was introduced by me and my good friend and colleague from New York, VITO FOSSELLA, toward the goal of maintaining America's competitive business advantage. Although Mr. Fossella and I may be on opposite sides of the aisle, we stand in the same space when it comes to our support for American businesses and American markets.

Recently, Mayor Michael Bloomberg of New York City and Senator CHARLES SCHUMER commissioned a study on ``Sustaining New York's and the U.S.'s Global Financial Services Leadership.'' In the executive summary of that study, it states, ``The U.S. financial markets, with New York at the center, are still the world's largest and are among the most important by many measures.''

The United States is home to more of the world's top financial services institutions than any other country. Six of the top 10 financial institutions by market capitalization are based in the New York area, and U.S.-based firms still head the global investment banking revenue rankings.

In terms of global financial stock, the United States remains the largest market, well ahead of Europe, Japan and the rest of Asia, although the financial stock in other regions is now growing faster than it is here in the United States. The United States generates more revenues from financial services than any other region. But once again, the rest of the world is challenging that leadership in a hotly contested investment banking and sales and trading markets.

To sum up that paragraph with a phrase that Satchel Paige is known for: ``Don't look back. Someone might be gaining on you.''

To further quote the study, the study says: ``The choice of venue for IPOs offers the most dramatic illustration of the interplay between these factors. The world's corporations no longer turn primarily to stock exchanges in the United States, such as the New York Stock Exchange or NASDAQ, to raise capital internationally.'' It continues to say: ``The IPO market offers other examples of jurisdictional arbitrage working against the United States, with very small-cap companies in the United States increasingly favoring London's Alternative Investment Market over NASDAQ,'' and I add here the American Stock Exchange. ``American private equity firms are choosing to list on European exchanges.''

Mr. Speaker, in this study, leading financial services executives who were interviewed indicated that ``the legal environment and regulatory framework in particular were critical to potential issuers considering whether to enter the U.S. markets.'' The implementation of Sarbanes-Oxley was part of the United States regulatory framework that was cited as a concern for issuers in considering the markets in which they would list.

This is why earlier this year I introduced H.R. 1508, the COMPETE Act of 2007, to improve the implementation of section 404 of Sarbanes-Oxley. My office has worked closely with the PCAOB and the SEC to review and discuss the regulatory reforms of SOX. We hope it will improve the implementation of the law.

Toward continuing my efforts to improve our regulatory environment, H.R. 2868 will make a technical change to the 1996 National Securities Market Improvement Act that would allow the American Stock Exchange and NASDAQ to offer a tier 2 level listing if they so choose. This would allow these exchanges to compete more directly with the London Alternative Investment Market and the Toronto Stock Exchange. It will help us keep our competitive advantage and lead.

Mr. Speaker, I would also like to thank Chairman Frank for moving this bill through the committee. I would also like to give special thanks to my cosponsor, Mr. Fossella, for the work of his office, particularly Ryan McKee. I also want to thank Lawranne Stewart and Deborah Silberman of Mr. Frank's staff, and of course Mr. Jameel Johnson, my chief of staff.

Mr. Speaker, I reserve the balance of my time.

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Mr. MEEKS of New York. Mr. Speaker, again, I would like to thank Mr. Fossella for all of his hard work, because that is what we are talking about. We are talking about basically the backbone of America has always been its small businesses. So when we have these firms, we want them to invest and grow their businesses right here in the United States of America.

It makes great sense, because as they are investing and expanding their businesses, it creates jobs for Americans. When you look at the services, the financial services in particular, that is where the jobs are being created, that is where we are the most competitive, and that is where we have got to stay and keep our competitive edge. It makes great sense for us to make sure that tomorrow continues to be the great day for our financial services industry, because it is the key to the economic security, as well as to the jobs of tomorrow for many of our young people.

Mr. Speaker, I urge all of my colleagues to vote for this bill. It makes great sense, and it helps us maintain the competitive edge and helps us maintain being the financial capital of the world.

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