If Ottawa’s plans to regulate Bay Street blow up, does Toronto win again?
One of Stephen Harper’s low-profile priorities is a plan to bring all of Canada’s provincial securities regulators under one national roof, the way most other developed countries did in the previous century. The provinces tend to be a protective lot, and so Ottawa’s attempts to convince them to get on board don’t seem to be working: B.C. and Quebec loathe the idea, and rumour has it that Brad Wall and Ed Stelmach will be discussing their own western regulator this weekend at the Grey Cup. And now the Globe and Mail is reporting that Dwight Duncan, Ontario’s finance minister and one of the only province-level supporters of Harper’s idea, is worried the wheels are coming off the rails.
“I think the federal government is losing control of this file,” Mr. Duncan said Thursday. “I’m getting very nervous about this. There’s no federal leadership.”…
Jim Flaherty countered that successive federal governments have tried and failed to change the system over the past 40 years. “We as the federal government have moved the issue farther down the field than ever before in the history of Canada,” he told reporters on Thursday.
The fate of the country’s antiquated regulatory system will ultimately be determined by the Supreme Court of Canada, where the federal government will attempt to secure a ruling that it has the authority to create a single agency. Mr. Flaherty said the matter is “quite properly where it ought to be now.”
It’s difficult to imagine the Supremes coming out with anything other than a “yes” to Ottawa’s request, though that’s not even half the battle with the provinces. More important is what happens if this all blows up. The status quo seems to work pretty well for Toronto, with the vast majority of trading happening on Bay Street and the regulation happening just a few blocks away at Queen’s Park.
If nothing else, we’d chuckle at the irony: by blowing up the alternatives, Alberta and Quebec managed to reinforce a system that keeps Toronto at the centre of the financial universe in Canada.
• Ontario fears national securities regulator plan is ‘falling apart’ [Globe and Mail]
3 thoughts on “If Ottawa’s plans to regulate Bay Street blow up, does Toronto win again?”
There is a very good possibility that the Supreme Court of Canada will reject the feds’ attempt to create a single federal regulator.
The feds have to win on 5 tests as set out in the SCC decision in GM vs Leasing.
For the 5th test, the feds have to show that just about all the provinces are supportive of this single national regulator. In fact only Ont and may be BC are in favour. If Alta, Man and Que are against this single regulator, the SCC will vote ag giving jurisdiction to this new fed regulator.
This new single national regulator will be neither single nor national, as there will be many competing provincial regulators conflicting with the federal regulator.
For the 4th test the feds have to show that the provinces are incapable of enacting and administering national securities rules. But the provinces have been doing that through the passport provincial securities system. Ont just enacted derivatives legislation which deals with systematic risk, thus undercutting the fed argument that only the single fed regulator can deal with systematic risk.
I have a real problem with taking Dwight Duncan seriously when he justifies supporting a single national regulator for Ontario, because “everybody is telling me internationally that Canada must have a single regulator.”
Who is everybody, Dwight?
Are we referring to the finance ministers of Portugal, Ireland, Italy, Spain, Greece and Britain? All of these nations are on life support. And these jokers are telling us in Canada that we must have a single regulator. Give me a break, Dwight. Show some sense for a change.
The Bay Street herd, ie bankers, pension funds, securities lawyers, investment advisors, is all supporting this illusory dream of a single national regulator.
Unfortunately, the reality is that this single national regulator will be neither single or national.
Explain to me why the Ont Govt will proceed to voluntarily repeal the best and most comprehensive securities act in Canada, ( about 160 pages) and then its 3600 pages of regulations and then dismantle the OSC, the most respected securities regulator in Canada, and voluntarily join the single federal regulator, which at most will be regulating Ont, BC and a few other small provinces.
Please explain how Ont will benefit when Ont and the rest of Canada are thrust into many years of discord, disharmony and jurisdictional disputes between the single fed regulator and Ont on one side and the opposing provinces, ie Alta, Sask, Man, Quebec and New Brunswick, on the other side.
How are Ont’s interests advanced when because of this ill-conceived non single and non national regulator, the Ont capital markets are terribly disrupted due to the uncertainty of the warring provinces? Capital and domestic and foreign investors hate uncertainty and conflict. Capital and these investors will flee Ont and invest in the US, Asia and Europe where there is more stability. As a result Toronto’s financial industry will suffer, jobs will be lost and Toronto’s economy will decline?
Minister Duncan, why are you dismantling our OSC and repealing our Securities Act, and throwing Toronto into years of turmoil as a result of a disruptive ( to Ont’s capital markets) transition to a single federal regulator that will only lead to Toronto’s decline as a financial capital.
Dwight, withdraw your support for this ill-conceived single national regulator before you go down in history as the architect of the decline of Toronto’s financial industry.
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