TSX boss leaving post with mixed emotions

(October 12, 2004) The outgoing president of the Toronto Stock Exchange admits she’s leaving her position without accomplishing one of her main goals: establishing a single securities regulator in Canada.

Last month, Barbara Stymiest announced she was quitting the TSX after a five-year term to accept a position in the private sector as chief operating officer at RBC Financial, starting November 1. Stymiest was the first major industry player to revive the single regulator issue in 2001 and has been a consistent champion ever since.

“I am resigned to leaving the securities industry without this problem being solved — yet,” she said in a recent speech to the Securities Traders Association in Florida.

Still, she says Canada’s securities regulatory practices, even with 13 regulators, are “undoubtedly stronger than they were three years ago when we began raising the issues concerning the costs and complexities of such a system.”

“Our willingness to challenge our own regulators on securities fragmentation in the primary market found significant support among Canadian issuers and market participants,” Stymiest added.

Indeed, Stymiest’s efforts helped pave the way for the creation of the federal wise persons’ committee, which concluded that Canada should adopt a single securities regulator. However, Ottawa has yet to act on the committee’s recommendations, apparently preferring to give the provinces a chance to come up with their own solution before stepping in.

Late last month, most provinces and territories signed on to a new deal to implement the passport system, which would allow companies to register to sell securities in one province or territory, with all other participating jurisdictions recognizing their credentials. However, Ontario, the country’s largest capital market, opted out, stubbornly sticking to its plan for a single regulatory agency run by the provinces.

In her Florida speech, Stymiest also tackled the Canadian response to the U.S. Sarbanes-Oxley act, which some have argued was too weak. But she argued that the Canadian and U.S. stock markets are fundamentally different, pointing to the preponderance of small cap firms in Canada as an example.

“Market participants in Canada are developing effective ways to both create a framework for internal controls for public companies and to assure investors that this framework is in place,” she insisted.

Stymiest admits that she lost the battle with the Canadian media that the TSX is an advocate of appropriate and effective regulation. “But in the end I think we won the war. The approach adopted by Canada’s regulators in their response to corporate governance and disclosure has addressed the same problems as Sarbanes-Oxley, and work continues.”

On the positive side, Stymiest noted a number of changes initiated under her watch, including a reduction in the structure of the Canadian market from six equity exchanges down to just two: The S&P/TSX Composite Index and the TSX Venture Exchange (plus the Montreal Exchange dealing in derivatives).

As well, she said the TSX has upgraded its technology, “turning a significant weakness into a new source of strength.

“In contrast to four years ago, when we had some embarrassing crashes at the peak of the tech boom, we had 100% critical system availability in 2003 and so far this year we have had substantially the same performance.”

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“Five years after we began to confront some pretty basic problems, our stock exchanges are in a pretty sweet spot,” she added.

Stymiest also introduced the TSX brand and presided over the TSX’s move to go public, the first stock exchange in North American to do so. “As of September 30, our 12-month return was 60%, the second best among public exchanges in the world.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(10/12/04)

Doug Watt