The storm had been gathering momentum for years. And last week it finally erupted when Ontario’s minister of financial institutions,
Monte Kwinter, announced that the province would allow foreign interests and financial institutions free access to its highly protected securities industry. Under the proposed regulation, Canadian banks, insurance and trust companies could own 100 per cent of any investment dealer in Ontario, starting on June 30. Foreigners will be allowed to increase their stake in any Ontariobased securities firm to 50 per cent from 10 per cent at the same time, and to 100 per cent on June 30,1988.
The minister portrayed Ontario’s decision to throw the doors to its securities industry wide open as the province’s response to the growing internationalization of the world’s money markets. However, some provincial government officials and industry spokesmen, who asked to remain anonymous, told Maclean’s that Ottawa forced Ontario into allowing the federally regulated banks unlimited entry into the lucrative brokerage industry. As well, industry officials said that they believe the federal government appears to be moving toward creating a national securities commission, which would usurp Ontario’s jurisdiction as the industry regulator. Said Kwinter’s executive assistant, Kenneth Rosenberg: “Ontario has no plans to cede or abdicate any of its jurisdiction in securities regulation.”
Indeed, Kwinter’s ministry consulted with federal government officials and with representatives of the province’s investment dealers before announcing the new regulations. The first meeting, between Kwinter and his federal counterpart, Thomas Hockin, minister of state for financial institutions, took place in Toronto on Nov. 11. There, insiders said, Hockin informed Kwinter that Ottawa planned to amend the federal Bank Act to allow financial institutions the right to own 100 per cent of a securities firm. Until then, the province had said that it was prepared to offer the
banks a maximum 30-per-cent stake.
Two weeks later, at another meeting, a provincial government securities regulator informed investment dealers of Ottawa’s plans. Only a year ago the clubby Ontario securities industry had
been adamantly opposed to opening up its business to others. But in recent months much of the world’s capital market has been deregulated and national barriers dismantled.
In anticipation of that, representatives from the securities industry and the provincial government have been meeting to study ways of opening up the industry without forfeiting control to the powerful banks and to non-Canadians. The securities dealers had said that they welcomed limited— not total—ownership by foreigners and financial institutions because that would increase their capital bases and help them to compete with large U.S. and Japanese firms. But William Wyman, chairman of Vancouver-based investment dealer Pemberton Houston Willoughby Inc., declared, “I don’t think the industry is necessarily thrilled with the result it got.”
Ontario’s new regulations were also partly a defence against Ottawa’s plans to designate Montreal and Vancouver as international banking centres, which threaten to erode Toronto’s pre-eminent role in the field. Now, the big banks are poised to move in quickly on the Toronto-based securities industry.
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