Securities Regulation

The following first appeared in the National Post, November 17, 2014

Anyone in the business community who draws breath will be aware that for some time now the federal government has been on the warpath to eliminate the provincially-based system of securities regulation and substitute a single national regulator. Unfortunately for the feds, in 2011 the Supreme Court ruled that the federal government does not have the constitutional power to enact a comprehensive scheme of securities regulation. The Court, however, did suggest that the feds have the power to enact securities laws designed to address nation-wide systemic risks, and to collect securities market information on a national basis.

Following this decision, the federal government and Ontario spearheaded an effort to get as many provinces as possible to sign on to a common piece of legislation known as the “Provincial Capital Markets Act” (PCMA) and to delegate their respective authorities to administer this statute to a common regulator – the Capital Markets Regulatory Authority (CMRA). Under the cooperative agreement (known as the “Cooperative Capital Markets Regulatory System, or CCMRA), the federal government is to adopt a statute called the “Capital Markets Stability Act,” which will deal with those matters within the feds’ constitutional capacity. They will also delegate their authority to administer the statute to the CMRA.

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.

Jeffrey MacIntosh, Financial Post · Nov. 2, 2011 | Last Updated: Nov. 2, 2011 3:08 AM ET

Medieval alchemists laboured like Trojans to turn lead into gold. More recently, the drive for energy security and low-carbon footprint fuels has produced a new generation of bio-alchemists. These modern-day Merlins spend their midnight hours seeking to turn biomass, or better still, sunlight, carbon dioxide and water, into "drop in" fuels that will power our planes, trains and automobiles with little or no modifications to either engines or infrastructure. A very Brave New World, indeed.

There are too many variations on these technologies to come close to an exhaustive enumeration in a short compass. However, what we're talking about is mostly designer strains of algae, yeast and bacteria (including e. coli). These Frankenbugs have attracted a sultan's ransom of government, venture capital, corporate and public funding. Promoters and underwriters routinely dangle the lure of a trillion-dollar energy market before mesmerized investors. But is there really an algal bloom in our collective energy future? Or a looming vapourware bust, reprising the bubble disasters of a decade ago?