Reuters reports that it looks as if foreign investment banks will need to adopt tough new US equity research regulations if they are to continue to do business in America.
California has told HSBC Securities that it has until 15th November to demonstrate that it is complying with the new disclosure regulations or the firm will not be invited to do any further work in the state. The British-based investment bank has completed around $8.4bn in transactions with California since 1997. HSBC has confirmed that it will change its equity research disclosure procedures and will therefore not be disadvantaged.
Although Deutsche Bank, UBS Warburg and CSFB are all already operating in compliance with the new regulations, other foreign banks have yet to change their procedures. California has confirmed that no investment bank will be able to transact business with the state unless it operates in accordance with the new guidelines.
California's stance will no doubt soon be adopted by all other US states.