According to the Wall Street Journal article this past weekend part of the problem stems from the market for initial public offerings. Twenty (20) global IPO’s went public last year and only one (1) was listed in the US. Many Wall Street insiders worry that this is the result of increased costs of going public along with litigation and a flurry of new corporate governance regulations.

There may be a glimmer of hope. A private sector group appropriately called the “Committee on Capital Markets Regulation” offered a number of measures last week designed to ease the regulatory burdens on companies that list their securities in the US. The group, led by former CEO Hank Greenberg of AIG, has the unofficial backing of Treasury Secretary Henry Paulson.

Are US markets losing their dominance?

The US is losing the battle for new issues of stock. This year, it accounted for only 28% of all new equity raised in the world’s top 10 financial markets, down from 41% in 1995.

Again, the reasoning for this drop is the same as previously stated: litigation, rising costs and most importantly, new onerous SEC regulations that make it difficult for companies to comply, cost a fortune each year and take a substantial bite out of their profits.

Can the US regain its edge?

The US is still the largest magnet for foreign capital. Foreign investors held $2.3 trillion of US stocks in 2005, up 77% since 2002. But if US companies start moving in droves to foreign markets for listing to escape US regulatory restrictions so will the investors money.

The powers that be better wake up and clean up their act. If they do not address these issues and others we will all be watching CNBC twenty years from now and when the cameras show the floor of the NYSE there will be four guys standing around looking at each other and enough room to set up a bocce ball court.

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