While the US proxy system suffers from a great deal of mechanical failures (which is not surprising if one looks at the dazzling charts created by Marcel Kahan and Edward Rock to illustrate the US securities holding system), at least an investor located in Massachusetts won't have any more problems voting his shares in a Delaware firm than an investor located in Delaware.
Not so in Europe. Cross-border voting is extremely complex, and European regulators have long tried - and failed - to come up with a sensible solution.
With cross-border share ownership increasing (see the chart on the right) and pressure on institutional investors to actively monitor portfolio firms mounting, the need to get the plumbing straight is greater than ever.
The European Commission is now set to launch a consultation on a Securities Law Directive which is supposed to tackle this issue, and market participants are letting their voices heard. In August, a group of investors led by Eumedion, Eurosif and the Association of British Insurers sent a letter to Commissioner Barnier to express their views on the issue.
The Financial Times ran an article on Monday (in which they also cited my paper on the influence of financial intermediaries on the legislative process) which offers a good overview of the issue. It'll be interesting too see what comes of the Commission's proposals, and over here at TDT we'll be monitoring developments closely.
Meanwhile, across the Atlantic, the SEC is of course also looking at the mechanics of the proxy process. It's too bad path dependency is such a huge problem here, otherwise it would have been nice to design a simple and universal voting system from scratch.
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