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
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.