"The U.S. might wish to explore the broader potential of the mutual recognition of stock exchanges as an alternative to the immense difficulties associated with global harmonization," Ms. Stymiest told a luncheon audience organized by the Canadian Society of New York,
Ms. Stymiest first proposed the mutual recognition of stock exchanges at a recent speech in Paris where she said the integration of capital markets could reduce investor costs for cross border trading by more than half, sharply increasing trading volumes and reducing the costs of capital.
The potential benefits, she said, are enormous for the U.S. and European markets, which together represent 80 per cent of the world's market capitalization. "My particular concern has been the wedge that has been driven between Europe and America on securities issues," said Ms. Stymiest. "It is especially worrisome for a comparatively small country like Canada, the smallest of the markets on the North Atlantic triangle."
The transatlantic mutual recognition of exchanges was first proposed by Dr. Benn Steil of the U.S. Council on Foreign Relations. In a report published late last year, entitled, "Building a Transatlantic Securities Market", Dr. Steil contends that the Sarbanes-Oxley Act is little more than an expansion of American protectionism, increasing the cost for US investors of buying and selling shares of companies listed overseas.
Ms. Stymiest believes that there is a groundswell of support in U.S. financial circles for more liberalized borders and ease of transatlantic trading. She said, "The confidence that once prevailed abroad in the strength and integrity of American companies has, if anything, grown worse as the arguments have escalated over whose corporate governance and accounting standards are best."
She cited a recent survey among fund managers in the U.K. and the U.S. that found that 74 per cent of U.S. fund managers have "a great deal" or "a lot" of confidence in U.K. audited financial information. But only 19 per cent of U.K. fund managers have comparable confidence in U.S. numbers. "Most troubling of all, the survey found that U.S. fund managers have more faith in U.K. numbers than they do in U.S. numbers. These are not the kind of attitudes on which a recovery in hefty transatlantic investment flows can be built," she added.
She summed up by saying the U.S. can, and should, explore all potential benefits in Canada and Europe with respect reforming international financial services.
Copies of Ms. Stymiest's speech are available on tsx.com.
About TSX Group
TSX are the initials attached to the core operations of TSX Group:
Toronto Stock Exchange, TSX Venture Exchange, TSX Markets and TSX Datalinx. TSX Group operates Canada's two national stock exchanges serving the senior equity and public venture equity markets. TSX Group is headquartered in Toronto and maintains offices in Montreal, Winnipeg, Calgary and Vancouver.
