Faculty Blog

National Post, 21 May, 2014, p. F11

Canada’s investment industry behemoths – aided by misguided regulators – are plotting to shut out upstart competitors to the detriment of investors

In his magnum opus “The Wealth of Nations,” Adam Smith, the über mensch of competitive markets, famously opined that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” It turns out that Canada’s securities dealers have been doing quite a bit of partying lately. The remarkable thing is that, in their proposed amendments to the Canada’s securities market trading rules released last Friday, Canada’s securities regulators are supplying the beer and wine.

The core principal underlying today’s fragmented securities market, and the engine of competition and innovation, is the “order protection rule” (OPR). As the regulators’ report states, this rule ensures that the “best-priced displayed orders should generally be executed before inferior-priced orders.” The rule is advantageous for a host of reasons beyond merely giving investors the benefit of the best price possible.

"High frequency talker: Author of ‘Flash Boys’ has succeeded in demonizing an innovation that saves investors $9-billion a year"

Jeff MacIntosh, Special to Financial Post | April 14, 2014 7:51 PM ET
 

If high frequency traders are such bandits, why have so many gone out of business?

Michael Lewis’ book, “Flash Boys” – an ostensible indictment of high frequency traders (HFT) – has transformed Mr. Lewis into the undisputed heavyweight champion of the international talk show circuit. Media personalities around the world, including Canada’s own CBC, have been falling all over themselves to give Mr. Lewis a platform to carve up HFT in public. And, by-and-large, they have been uncritically swallowing his alarmist message that financial markets are “rigged.”

What a shame.

Perhaps the most important datum in this story is that alarmism sells. If Mr. Lewis had written a well-documented, impassioned defence of high frequency trading based on solid empirical evidence, his book would likely be well reviewed, sell a few thousand copies, and then quickly be forgotten. But who needs facts when you can get rich peddling soggy half-truths?

By Anita Anand

Published in the Globe and Mail on February 21, 2014

Board diversity is a hot topic in corporate Canada. With various European countries passing mandatory quota legislation to increase the number of women on boards and our federal and provincial governments calling for a balanced gender complement, regulators have faced increasing pressure to take a close look at the issue.

But recent evidence suggests that Canadian companies are already responding by voluntarily making changes around the boardroom table. Executive search firm Spencer Stuart has released a study indicating that Canadian companies may be surpassing their American counterparts in women’s representation on boards.

In 2011, the two countries were neck and neck, with 17 per cent women directors on the boards of Canada’s 100 largest companies and comparable U.S. firms. In 2013, Canadian companies were up to 20 per cent, while the U.S. percentage remained unchanged.

This is good news, but should not be confused with the overall picture. For example, of the 445 firms that responded to a recent consultation by the Ontario Securities Commission, nearly 60 per cent did not have a single woman director on their board.

The following first appeared in the Financial Post, 5 July 2012, p. FP11

For real estate, it's location, location, location. For national prosperity, it's innovation, innovation, innovation. Unfortunately, Canada still sets up shop in the low-rent district. We do lots of great R&D, which then sits on the shelf and collects dust.

The recent federal budget recognizes the problem and makes generous commitments for the support of innovation commercialization. There may be a fly in the ointment, however. The government plans to shift money out of the Scientific Research and Experimental Design tax credit (SR&ED - pronounced "shred" by aficionados) and into "direct" assistance, such as government-administered grants. This has the potential for harming rather than helping commercialization efforts.