Ontario, BC & Ottawa Come Together On Financial Market Regulations

Ihi-bayrtxz6re-8coln 2011 the Supreme Court of Canada ruled that the Harper Government can’t force a national securities regulator on the provinces. So in 2013, Finance Minister Flaherty has presented an agreement that, “represents the best of what can be achieved when a shared responsibility becomes a mutual goal.” Despite the advice of Supreme Court Judges, certain politicians and bureaucrats of Ontario and British Columbia have voluntarily entered into an agreement that puts the whole apparatus under one securities regulatory agency: the federal government.

The problem is simple: governments cannot calculate. The profit and loss mechanism just isn’t there. This crucial aspect of resource management allows price signals to actually mean something. Otherwise, government organizations spend x amount of y on b and c. It’s an endless calculating process that leads nowhere. Private enterprise, on the other hand, relies on mutual exchange. It calculates based on profit and loss. Entrepreneurs are directed to consumer satisfaction through price signals.

A financial security is essentially a contract that is assigned a value and then traded on financial markets. A securities commission is a government organization that acts as a sort-of “police” on the stock market; its aim is to facilitate law and order in the “Wild West” of electronic securities markets. It is believed by Prime Minister Stephen Harper and Finance Minister Jim Flaherty that a centralization of this power is a good thing. The leading figures in the Ontario and British Columbia governments tend to agree. A federal securities commission, like the U.S. Securities and Exchange Commission, is a good thing.

All rules and regulations, once dispersed among two provinces, can be united as one. “The announcement would have looked a little stronger had they had four or five provinces involved instead of just two,” said Richard Steinberg, chairman of Fasken Martineau’s securities and mergers and acquisitions group. Alberta would be a game changer, but Premier Alison Redford isn’t acting just yet. “We need to be able to see that protected,” she said referring to the Alberta Securities Commission.

But Ontario and BC are on board. Corruption will diminish, says the government. But what about the highly centralized U.S. Securities and Exchange Commission? Hasn’t this organization clearly shown that is highly susceptible to corruption? How exactly is nationalizing the regulatory agency supposed to benefit Canadians?

The plan is to make it easier for companies and investors to navigate the system by eventually having a single set of rules nationwide. Therefore, Canadian politicians can conspire with other politicians worldwide in a G20-type format. They can plan an international set of bureaucratic rules and regulations that probably benefits their crony-capitalist friends more than the consumer.

But what about the free market? Can’t it provide a single set of rules – not only nationwide – but globally? Why must we rely on these global technocrats for “facilitating capital markets.” These are the same people that keep interest rates low and money cheap. They clearly have no idea what they’re doing and should not be trusted with a provincial securities commission, let alone a federal one.

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4 Responses to “Ontario, BC & Ottawa Come Together On Financial Market Regulations”

  1. Jerry says:

    No one should be buying those things in the first place. There are so many negatives and very few positives. They are suitable for only a small number of people.

  2. Ohhh Henry says:

    I think I made it clear that I was speculating in the absence of up-to-date statistics.

    Only people working within large Canadian banks could give you up-to-the-minute figures for nationwide RRSP contributions/withdrawals that would be statistically meaningful, at least for their own bank. But they will not tell you these things (obviously). CRA/StatsCan may not know what's going on until after the end of this tax year (in Spring 2014) and in any case Statscan probably takes over a year to digest and publish tables and charts of this information (none of their existing RRSP statistics seem to be less than 2 years old AFAICT).

    If you care about this issue then I recommend that you put in a call to a friendly financial planner or front-line banker and ask what they're seeing right now … anecdotally. I know people who are cashing in their RRSPs to pay their bills. I don't know anybody who is making significant RRSP contributions, and friends in the front lines of the financial industry told me that many people are cashing in RRSPs. That's all I know.

  3. The Moneychanger says:

    Henry do you have any figures to back your claim or are you like a bureaucrat and expect me to believe you?

  4. Ohhh Henry says:

    Some things that people in the financial industry have told me, and some anecdotes from acquaintances lead me to believe that there may be a net outflow of money from Canadians' RRSP accounts right now. People are cashing in their retirement savings due to financial distress and they're not even retired.

    In other words, there may not be much of a capital market in Canada for the feds to 'facilitate' any more. It could be a Pyrrhic victory if the feds seize control of provincial markets … or they may feel that getting their hands on currently moribund markets will pay off down the road when they assume that prosperity will return.

    Of course the consumption of capital in itself would be a sign of a terrible decline in wealth and a very bad omen for the future. We're already in a deep and worsening depression. It might end with governments relaxing their stranglehold on money and markets only after a terrible war, as in the 1930s-40s. Or perhaps worse, Canada could dive to the depths and stay there under a regime of more-or-less permanent inflation and heavy government meddling (i.e. theft), as in Argentina.

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