TSX Group CEO Richard Nesbitt, today applauded the finance ministers and bank governors of the G-7, the major industrial countries, for agreeing to consider free trade in securities based on mutual recognition of regulatory regimes.
Mr. Nesbitt said the agreement represents a significant success for Canadian Finance Minister Jim Flaherty who first raised G-7 consideration of the issue in a letter to U.S. Treasury Secretary Henry Paulson. Of particular importance, he said, is that “the U.S. has agreed to consider the concept of mutual recognition of other countries’ regulatory regimes. European countries have long accepted the idea of mutual recognition. We are very pleased by these developments. This is an historic and highly positive shift in the U.S. position.”
He added, “I’ve sent Mr. Flaherty a letter thanking him for his role in breaking this logjam and congratulating him for a significant success at the G-7.”
Until the G-7 meeting in Essen, Germany, last weekend, the U.S. had been a strong opponent of recognizing that other countries’ regulations, while different in detail, were equivalent in purpose and effectiveness. It has insisted that those seeking access to U.S. markets and seeking to serve U.S. investors be subject to U.S. regulations, meaning that Canadian and other G-7 market participants face a second layer of regulation when they want to start U.S. operations.
Mr. Nesbitt said “this has created an uneven playing field for the Canadian securities industry because Canadians have relatively easy access to the U.S. market, albeit at unnecessarily high costs, but U.S. investors have far greater difficulty using Canadian brokers and accessing the Canadian market. Trading and data rules also serve to protect the U.S. securities industry from Canadian and other competition.” He added, “Allowing U.S. exchanges, brokers and other market participants to operate freely in Canada under U.S. rules, while allowing Canadians to operate freely in the U.S. under Canadian rules would help level this playing field.”
Mr. Nesbitt has been arguing for free trade in securities based on mutual recognition since he became CEO of TSX Group two years ago, starting with a speech to the Harvard Club in New York City in April 2005. He made the same proposal in a speech to the U.S. Chamber of Commerce in Washington last April, and in private meetings with U.S. administration officials including the U.S. Treasury, the U.S. Securities and Exchange Commission and the U.S. Council of Economic Advisors. Copies of those remarks are on tsx.com.
