(The news featured below is a selection from the news covered in SEC Today, which is distributed to subscribers of SEC Today.)

Campos Says Commercial Competition Drives Rules vs. Principles Debate

SEC Commissioner Roel Campos believes the dichotomy between what some see as a U.S. rules-based approach to regulation and the U.K.'s principles-based approach is overblown. It is not a matter of choosing one over the other, he said in a speech to the Luxembourg Fund Industry Association. The underlying market realities drive the differences, in his view.

Campos also identified commercial competitiveness as the driver of the discussion of principles versus rules. He explained that the financial centers in London market very aggressively and highlight their regulatory approach as a selling point. Campos noted that the Financial Services Authority's Callum McCartney has made clear that the FSA is not a "light-touch" regulator, but a strong enforcement agency. However, Campos believes that the commercial interests in London promote the principles-based nature of the FSA regime to gain a competitive advantage.

There is a danger in this approach, in Campos' view. He said that regulators should not be seen as biased toward a particular jurisdiction because it could lead to a regulatory race to the bottom. He hopes that regulators will not get caught up in the commercial competitiveness since that could compromise their role.

Campos said the issue of principles versus rules deserves consideration and debate, but it should not be held in a vacuum and should not devolve to sound bites about which approach is better. The discussion should take place within the context of the particular jurisdiction, he explained, in order to understand how the two systems work. The debate should also take place within the context of mutual recognition and the increasing globalization of the markets, he said. Investors will all benefit if international jurisdictions use broad principles to bridge their differences and promote convergence, he concluded.

Campos' written remarks are posted on the SEC's Web site.

Jacquelyn Lumb