A consensus is embracing a new  solution to the challenges  posed by the integration of  global securities markets: mutual recognition. On Tuesday, the US Securities and Exchange Commission will hold a round-table discussion to consider how to assess regulatory comparability and its effects on investors and markets.

But neither convergence nor mutual recognition will work. Instead, regulators should recognise that two markets exist in every country – a local one subject to domestic regulation and an international one subject to foreign laws. The solution is not to make these markets the same, but to educate investors about the differences between them and to allow these markets to compete to the benefit of investors.