The push to wind back Sarbanes-Oxley continues with US Senator Charles Schumer and New York Mayor Michael Bloomberg releasing a 134-page report urging legal and regulatory reforms to make the United States more attractive for business.

The report,Sustaining New York's and the US' Global Financial Services Leadership, was prepared by McKinsey. It follows the interim report of the Hank Paulson-backed Committee on Capital Markets Regulation.

As a document, it reminds us that all too often, consultants are paid to tell their clients what their clients want to hear. In other words, the clients seek approval for the course of action already decided upon. Not bad work if you can get it.

Still, it does give us some clues about what could be ahead for SOX. Like the Committee on Capital Markets Regulation, this report singles out Section 404 of Sarbanes-Oxley as an impediment but the focus here is on implementation. Backing the Securities and Exchange Commission and Public Company Accounting Oversight Board's moves to ensure less painful implementation, the report suggests the SEC might also consider allowing smaller companies to "opt out" of the more onerous provisions of the Act, providing they disclose this to investors.

Significantly, the McKinsey crew does some opting out itself by failing to define what they mean by "smaller".

The report also says the SEC might consider exempting foreign companies from parts of Sarbanes-Oxley. Other proposals include securities litigation reform, easing restrictions on skilled non-US professional workers and recognising international accounting standards without reconciliation, and promoting the convergence of accounting and auditing standards.

The report warns that the US will lose substantial market share in investment banking and sales and trading over the next five years if the trends are left unchecked and officials have told reporters that New York could be relegated into a second-tier financial centre if nothing is done.

Still let's get some perspective. The US is still the world's biggest and deepest market, well ahead of Europe, Japan and the rest of Asia. Indeed, the size of the US market is equivalent to Europe and the Asia-Pacific region, minus Japan. New York is at the centre, and it's not exactly fading away.

True, other markets are now growing faster but that has more to do with globalisation than Sarbanes-Oxley.

Fixing Sarbanes-Oxley is laudable but that won't solve the problem. The world's markets are growing faster because other forces are at work as Larry Tabb points out in this piece in Wall Street & Technology.

The world is increasingly flat and that means global capital is finding other places to park. But it cuts the other way too. A flatter world means the issue of where a company has its stock listed is now irrelevant. What's relevant is who actually owns it.

In his Capital Flow Watch blog, John Oswin Schroy says Sarbanes-Oxley is now probably "Dead Meat".

I suspect not because the Act is simply too extensive to be wiped out completely. But certainly, the McKinsey report adds momentum to the push for more flexibility in the regulatory environment and we can expect to see more changes ahead.

As for New York, it won't be relegated to the sidelines. But bouncing back will mean dancing to a very different tune.