Capital Markets Need Tax Cuts and End of Regulatory Overload. (A Matter of Trust)
The ability of business to raise capital is fundamental to the economic welfare of all Canadians. But Canadian firms face problems in Canada's financial marketplace. The consolidation of stock exchanges and other industry measures are seen as major improvements. But immediate government action is needed to end costly regulatory overlap and fragmentation, together with tax cuts that strengthen investor incentive. Speech to the Canadian Club of Toronto, May 6,2002.
I am speaking to you today in my role as chair of the Investment Dealers Association of Canada and I'd like to take a moment to describe our role and responsibilities...
The IDA is the national self-regulatory organization and representative of the Canadian securities industry. Our role is to protect investors and ensure the integrity of the marketplace.
We regulate and represent an industry that employs some 37,000 Canadians and directly touches many people and businesses, either as investors or as issuers of various types of securities. Our 200 member firms include sic bank-affiliated full service firms as well as a range of institutionally focused or retail service firms, full service or discount, each contributing in a significant way to the dynamism of the industry and the health of the Canadian economy.
We regulate the solvency, educational proficiency, and sales and business practices of our member firms and their approximately 16,000 registered employees across Canada. We are committed to ensuring the integrity of the Canadian marketplace with an efficient, responsive, and transparent enforcement system. Our rules are designed to protect investors, ensure marketplace integrity, and promote efficient capital markets.
Our member regulation responsibilities cover virtually the entire securities industry in Canada today, as we have taken on the member regulation responsibilities of the Toronto Stock Exchange and CDNX. In addition, the IDA has a 50% ownership of RS Inc., the new equity market regulator.
The IDA represents an industry that has been transformed by globalization and new technologies and by the new demands and needs of the Canadian investing public. We remain unchanged in our commitment to generate capital, create jobs, and provide investment opportunities for all Canadians, and that's what I want to talk to you about today.
As investment professionals, our capital market specialists are partners with Canada's business leaders, working to build a strong economy for our families and our communities. We work with Canadian firms to provide the funds they need to get off the ground or to grow. We work with local businesses, to help them become national ones. Or even multinational ones.
In one sense, what we do is quite simple. We raise capital and then pass it on to public companies that want to expand or make an acquisition. It may be simple but it's essential.
Healthy -- and that means liquid and efficient -- capital markets grow the economy. As a Maclean's article put it: "The capital markets are the grease of the economy's engines -- without money, things come to a grinding halt. And business goes elsewhere."
How important are liquid, efficient capital markets to Canadian business? Well, access to competitively-priced capital is especially crucial in a capital-intensive economy like ours. It made it possible to build our natural resource industries, like forestry and energy, and it made it possible to grow Canada into a manufacturing centre.
Canada's capital needs have been growing exponentially to fund expansion of existing operations and new enterprises. During the 1990s, financial requirements for Canadian companies tripled, last year totalling close to $60 billion in capital markets. Last year, common equity financings for emerging companies and small companies -- in other words, venture capital financing -- totalled nearly $5 billion. …