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SEC considers easing foreign trading

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KAI RYSSDAL: The Securities and Exchange Commission wants to make it easier for Americans to dabble in foreign stocks. It’s mulling a proposal that would let U.S. investors trade on other countries’ stock exchanges. Marketplace’s Nancy Marshall Genzer reports now from Washington.

NANCY MARSHALL GENZER: We’re not exactly talking about traders without borders. Average Joes would still only be able to invest in foreign stocks through mutual funds. It’s our mutual funds that would have direct access to overseas markets. They wouldn’t have to go through their foreign affiliates or other overseas middlemen. The foreign stocks would just pop up on their computer screens. Glen Yago of the Milken Institute likens this to opening up a Wal-Mart.

GLEN YAGO: The Wal-Marting of capital markets will lower the cost for all consumers by creating multiple access into multiple markets across the world.

This Wal-Mart would be well stocked but choosey. U.S. investors would only be able to buy stocks in markets that pretty much follow Wall Street rules. Moody’s senior economist Tu Packard says that’s designed to shore-up investor confidence.

TU PACKARD: U.S. investors can feel assured that the overseas markets that they would be buying shares in are as safe as their own markets.

The proposal could help midsized U.S. brokers who don’t have foreign affiliates. Now, this isn’t quite a done deal. All the SEC commissioners will say is they’re developing a proposal on foreign investing. Former SEC Commissioner Edward Fleischman says it’s no accident that reports of the proposal are hitting the headlines now. He says the SEC is …

EDWARD FLEISCHMAN: Running it up the flagpole to see whether Congress or the public strongly objects.

Fleischman says the SEC has batted this proposal around internally for at least a year. And there’ve been similar plans in the past. Fleischman tried to talk up the idea when he was a commissioner, 21 years ago.

In Washington, I’m Nancy Marshall Genzer, for Marketplace.

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