July 14, 2010
New Mowat Centre research on the federal government’s plans for a national securities regulator.
“Region” Trumps “Reason”: Federal Government Opts for a “Virtual” National Securities Regulator
Toronto – The federal government has announced its plans for a new securities regulator, which includes a “virtual” headquarters with the regulator’s powers and decision-makers dispersed across the country. This goes against the general consensus in the financial industry that a traditional bricks and mortar headquarters should be located in Toronto – Canada’s financial capital.
“A virtual head office is clearly a second-best option. It won’t be able to do its job as well. The federal government has opted to allow regional politics to trump good policy,” says Josh Hjartarson, Policy Director of the Mowat Centre at the University of Toronto.
Newly released research from the Mowat Centre, One Economic Market or a Collection of Jealous Rivals? Ensuring the Effectiveness of Securities Reform in Canada, demonstrates that the federal proposal should concern all Canadian consumers and investors.
The Prime Minister has indicated that he does not want the financial sector to be concentrated in Toronto. However, Hjartarson says that trade in financial services is clustered in a small number of global financial centres, and that Toronto is the only Canadian city that can realistically aspire to be among them.
“All of Canada has an interest in Toronto retaining and building on its current position. A legitimate global financial centre enhances the prospect of Canada capturing a larger share of the global trade in financial services and the ability to project Canadian leadership in global finance. This decision is detrimental to Canada’s goal of becoming a global leader in the financial sector,” says Matthew Mendelsohn, the Director of the Mowat Centre.
He adds that, “it would be unthinkable to have the head office of the National Energy Board outside Alberta or the head office of the Wheat Board outside the Prairies. It should be equally unthinkable to have the head office of the Common Securities Regulator outside Canada’s financial capital.”
The new regulatory legislation will not be considered by the House of Commons until next year. According to Hjartarson, “the federal government has plenty of opportunity to reverse this bad decision.”
For more information, please contact:
Laura Rosen Cohen, Communications Specialist Mowat Centre
(416) 978-7081
laura@mowatcentre.ca
