A long period of "phony war" is coming to an end as the federal government prepares to move ahead, finally, with legislation to create one pan-Canadian securities-regulation agency. Certain Quebec elites are united against the plan, but many ordinary investors will be feeling differently.
Finance Minister Jim Flaherty says his bill will be ready in a few weeks. He'll send it to Parliament but also to the Supreme Court, which will be asked in advance if the measure is constitutionally legitimate.
If the bill survives the legal and political obstacle courses it faces, the new federal agency could be protecting Canadians within three years. It's about time.
Almost every country on Earth has a central agency that supervises the issuance and trading of stocks and bonds, investment-company probity, and related matters. But Canada has 13 of them, one for each province and territory. So while the U.S. Securities and Exchange commission has this spring laid fraud charges against Goldman Sachs, there is no one agency to act for Canadians in case of anything comparable in this country. The plethora of small-scale regulators makes it hard for companies to operate. Not one of our 13 agencies has sufficient inspection and policing resources, which a federal agency could provide.
The Canadian Bankers Association notes that more than 90 per cent of capital-market transactions involve more than one province. The existing "passport" model by which regulators accept each other's decisions "simply doesn't deliver, especially for small and medium-sized businesses and individual investors," a CBA official told a 2008 federal study panel on the issue.
Quebec Finance Minister Raymond Bachand has argued this as a matter of provincial rights but now is talking more about high-paid jobs that might go to Toronto. Surely the reliability of our capital markets is more important than such petty considerations. In any case, Flaherty's budget in March promised a "structure that ensures broad provincial participation," for the new agency.
Bachand has been trying to get Quebec companies to join his fight. A few - several of them highly dependent on the provincial government - have signed on. As Gazette business columnist Peter Hadekel suggested this week, this is a fine example of "Quebec Inc." putting the interests of the business elite above those of investors.
Here are some companies unlikely to be invited to join Bachand's campaign:
Norshield, Mount Real, Norbourg, Triglobal Capital, Eurovision Financial Services, Progressive Management Ltd. ... (The Montrealers duped by fraudster Earl Jones learned too late that no regulator supervised his activities; they are however united in support of Flaherty's plan.)
It's a shame that the Quebec government puts protection of a few good jobs ahead of the security of our investments.
Read more: http://www.montrealgazette.com/opinion/editorials/Financial+industry+needs+national+regulator/3031150/story.html#ixzz0o1fkraul