May 29, 2008
Four provincial securities regulators are in talks with the U.S. market
watchdog toward a ground-breaking regulatory alliance, a deal that would
be enormously important to Canadian banks and investment dealers.
The move comes a month after the U.S. Securities and Exchange Commission
snubbed Canada by opening talks on what is known as “mutual” recognition
with Australia's national regulator, due to concerns over the problems
that come with trying to negotiate a deal with 13 Canadian provincial
Finance Minister Jim Flaherty has repeatedly pushed for closer
integration with U.S. capital markets so the SEC decision to consider an
Australian alliance was seen as a snub of the federal government. Until
now, the Americans have never allowed unfettered access to their
Alberta, British Columbia, Ontario and Quebec regulators are now in
talks with the SEC aimed at settling on a process that can in turn be
used to negotiate mutual recognition. This first round of discussions is
expected to conclude by the end of June.
The mutual recognition treaty being negotiated with the Australian
regulator would allow dealers in Australia to operate on Wall Street
simply by satisfying Australian standards, which translates into cost
savings and greater market access. Small to mid-sized Canadian companies
and investment houses stand to reap the greatest benefits from mutual
recognition with the U.S. regulator.
Under the current system, Canadian and other non-American investment
banks that want to trade stocks or bonds in the U.S. market must set up
U.S. subsidiaries, backed with capital and inspected by American
regulators. U.S. dealers don't face these restrictions when doing
business in Canada.