The Approach of Substituted Compliance in the United States

Abstract

Abstract The fourth chapter examines the approach of the United States to deference. For a long time, the US primarily pursued the principle of (modified) national treatment and did not allow any kind of recognition. Meanwhile, the US has implemented mechanisms of deference under the name of substituted compliance. However, the existing schemes are limited and lag behind compared to the developments in the EU and Switzerland. This chapter describes how a proposal by two SEC officials launched the first generation of substituted compliance and sets out why the proposal was not widely implemented. It also explains why the idea of substituted compliance experienced a comeback after the financial crisis. The extent to which substituted compliance has found its way into the US system, how the regimes have changed before and after the crisis, and what similarities and differences exist compared to the European and Swiss approaches is then analysed.