To express the sense of the Senate regarding concerns that United States capital markets are losing their competitive edge in intensifying global competition, and to recommend that Congress and the Administration take the necessary steps to reclaim the preeminent position of the United States in the global financial services marketplace.

1. Adds SEC. __. SENSE OF THE SENATE REGARDING CAPITAL MARKETS wherever appropriate

   Adds a section

   Inserted: SEC. __. SENSE OF THE SENATE REGARDING CAPITAL MARKETS.

   Inserted: (a) Findings.--The Senate finds that--

   Inserted: (1) United States capital markets are losing their competitive edge in the face of intensifying global competition, posing a risk to economic growth, a problem that is well-documented in initial public offerings (IPO), over-the-counter (OTC) derivatives, securitization, and traditional lending;

   Inserted: (2) according to the Senator Charles E. Schumer and Mayor Michael R. Bloomberg report, entitled "Sustaining New York's and the U.S.'s Global Financial Services Leadership", "In looking at several of the critical contested investment banking and sales and trading markets--initial public offerings (IPOs), over-the-counter (OTC) derivatives, and debt--it is clear that the declining position of the U.S. goes beyond this natural market evolution to more controllable, intrinsic issues of U.S. competitiveness. As market effectiveness, liquidity and safety become more prevalent in the world's financial markets, the competitive arena for financial services is shifting toward a new set of factors--like availability of skilled people and a balanced and effective legal and regulatory environment--where the U.S. is moving in the wrong direction.";

   Inserted: (3) further, the report referred to in paragraph (2) stated that--

   Inserted: (A) "The IPO market also offers the most dramatic illustration of the change in capital-raising needs around the world, and U.S. exchanges are rapidly losing ground to foreign rivals. When looking at all IPOs that took place globally in 2006, the share of IPO volume attracted by U.S. exchanges is barely one-third of that captured in 2001. By contrast, the global share of IPO volume captured by European exchanges has expanded by more than 30 percent over the same period, while non-Japan Asian markets have doubled their equivalent market share since 2001. When one considers mega-IPOs--those over $1 billion--U.S. exchanges attracted 57 percent of such transactions in 2001, compared with just 16 percent during the first ten months of 2006."; and

   Inserted: (B) "London already enjoys clear leadership in the fast-growing and innovative over-the-counter (OTC) derivatives market. This is significant because of the trading flow that surrounds derivatives markets and because of the innovation these markets drive, both of which are key competitive factors for financial centers. Dealers and investors increasingly see derivatives and cash markets as interchangeable and are therefore combining trading operations for both products. Indeed, the derivatives markets can be more liquid than the underlying cash markets. Therefore, as London takes the global lead in derivatives, America's competitiveness in both cash and derivatives flow trading is at risk, as is its position as a center for financial innovation.";

   Inserted: (4) on March 13, 2007, the Department of the Treasury convened a conference on United States capital markets competitiveness, where--

   Inserted: (A) key policymakers, consumer advocates, members of the international community, business representatives, and academic experts, each with different perspectives, discussed ways to keep United States capital markets the strongest and most innovative in the world; and

   Inserted: (B) conference delegates examined the impact of the United States regulatory structure and philosophy, the legal and corporate governance environment, and the auditing profession and financial reporting on United States capital markets competitiveness;

   Inserted: (5) the foundation of any competitive capital market is investor confidence, and since 1930, the United States has required some of the most extensive financial disclosures, supported by one of the most robust enforcement regimes in the world;

   Inserted: (6) a balanced regulatory system is essential to protecting investors and the efficient functioning of capital markets; and

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   Inserted: (7) too much regulation stifles entrepreneurship, competition, and innovation, and too little regulation creates excessive risk to industry, investors, and the overall system.

   Inserted: (b) Sense of the Senate.--It is the sense of the Senate that--

   Inserted: (1) Congress, the President, regulators, industry leaders, and other stakeholders should take the necessary steps to reclaim the preeminent position of the United States in the global financial services marketplace;

   Inserted: (2) the Federal and State financial regulatory agencies should, to the maximum extent possible, coordinate activities on significant policy matters, so as not to impose regulations that may have adverse unintended consequences on innovativeness with respect to financial products, instruments, and services, or that impose regulatory costs that are disproportionate to their benefits, and, at the same time, ensure that the regulatory framework overseeing the United States capital markets continues to promote and protect the interests of investors in those markets; and

   Inserted: (3) given the complexity of the financial services marketplace today, Congress should exercise vigorous oversight over Federal regulatory and statutory requirements affecting the financial services industry and consumers, with the goal of eliminating excessive regulation and problematic implementation of existing laws and regulations, while ensuring that necessary investor protections are not compromised.

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   Original wording

   At the appropriate place, insert the following:

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As printed