May 10, 2010 Securities

Montréal – Opposition is being organized in Québec to counter Minister Flaherty’s plan to impose a federal securities commission in Canada. Many players in the financial community have joined the Minister of Finance, Raymond Bachand, and the President and CEO of the Autorité des marchés financiers, Jean St-Gelais, to urge the federal government to abandon its project, which is far from receiving unanimous support in the country.

A coalition is born

“The Minister of Finance of Canada must note that Québec does not endorse his plan. Opposition is growing and a genuine movement is taking shape to oppose the federal will to move forward at all costs,” Minister Bachand said.

The spokesperson for the coalition, Françoise Bertrand, has expressed the growing concern of the business community regarding the federal proposal. “Beyond the job losses that such a project may cause, we fear a major shift of decision-making positions and expertise out of Québec. Montréal, as a financial centre, and Québec would be weakened,” said the president of the Fédération des chambres de commerce du Québec.

The coalition is made up of representatives from the whole business community of Québec (see appendix).

Negative economic impacts

The announcement of the coalition’s formation coincides with the publication of an analysis of the economic issues associated with the implementation of the federal proposal. The analysis, produced by SECOR, concludes that the project would deprive Québec of an important support for its economic development and contribute to weakening Montréal as a financial centre. The number of jobs related to the financial sector is now estimated at close to 300,000 of which nearly 150,000 are in the Montréal region.

“The securities regulation system in place in Canada is ranked among the world’s best by several organizations including the OECD, the World Bank and International Monetary Fund. A massive and unprecedented collaboration by the participating provinces and territories as well as their regulators has resulted in the establishment of a one-stop mechanism in Canada while preserving the ability of each province and territory to decide its own policies and give its investors the best protection possible,” the Minister of Finance said.

The President and CEO of the Authority stressed the important role played by his agency in overseeing and supporting the development of the derivatives market in Montréal. “This market represents hundreds of highly skilled jobs in Montréal. Maintaining and developing this niche of the financial sector in Montréal is a priority for us. The Authority wants to continue fostering the economic development of Québec while overseeing the financial markets,” Mr. St-Gelais said.

An isolated centralized system

For the Minister of Finance, the federal government’s plan is likely to ignore the particularities of the Québec market to impose conditions that allow Québec to continue to develop on a sound basis. “The federal government’s plan could lead to the development of new financial policies in Canada behind closed doors. Do we want to leave it to others to decide the financial rules applicable in Québec? We are not against a pan-Canadian system. We are opposed to a centralized system,” he said.

The Minister noted that SECOR’s analysis shows how the proximity of the Authority nourishes a particular sensitivity to the needs and particularities of Québec in market oversight and how the Authority maintains this proximity by hosting a multitude of events and meetings with these players. Yet there has been no strong argument supporting the need for a federal commission that would replace the current Canada-wide system that works very well indeed and continues to improve with the passport system.

Business community rallied

“Securities regulation falls within the exclusive jurisdiction of the provinces. Yet, the federal proposal encroaches on provincial jurisdiction over property and civil rights. Today, we are in the presence of a strongly mobilized representation of Quebec's financial sector against the federal project. It is imperative that we unite our efforts to make Québec a strong financial centre and contribute to maintaining and creating highly qualified jobs in finance,” Minister Bachand said.

In July 2009, the Québec government referred the federal plan to regulate securities to the Québec Court of Appeal. The federal government has announced that it would seek the opinion of the Supreme Court on the constitutional validity of its plan.

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Sources:

Catherine Poulin
Press Relations Officer
418 643-5270
514 873-5363

Sylvain Théberge
Autorité des marchés financiers
514 395-0337, poste 2343
514 940-2176

Appendix

Members of the coalition against the federal government's securities commission project