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Cablegate: Ontario Pleased That Sec to Move Forward On Mutual

VZCZCXRO7163
PP RUEHGA RUEHHA RUEHQU RUEHVC
DE RUEHON #0167 1511328
ZNR UUUUU ZZH
P 301328Z MAY 08
FM AMCONSUL TORONTO
TO RUEHC/SECSTATE WASHDC PRIORITY 2508
INFO RUCNCAN/ALCAN COLLECTIVE
RUEHLO/AMEMBASSY LONDON 0060
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS TORONTO 000167

SIPDIS
SENSITIVE

STATE FOR WHA/CAN (RIOS) AND EEB (SIROTIC)
DEPT PASS USTR FOR MELLE, MENDENHALL, SULLIVAN
TREASURY FOR INTERNATIONAL AFFAIRS (TRAN)
COMMERCE FOR 4320/ITA/MAC/WH/ONIA (WORD)

E.O. 12958: N/A
TAGS: EFIN EINV ETRD PGOV CA
SUBJECT: Ontario Pleased that SEC to Move Forward on Mutual
Recognition

REF: (A) 07 Toronto 375

Sensitive But Unclassified - Please protect accordingly.

1. (SBU) On May 29, following a series of meetings in May with the
Ontario, Quebec, Alberta, and British Columbia securities
regulators, the U.S. Securities Exchange Commission (SEC) announced
a schedule for completion of a framework that would allow the
discussion of U.S.-Canada mutual recognition of securities
regulation. An Ontario Securities Commission (OSC) contact told us
on May 29 that they were pleased with the announcement, and were
working hard to make mutual recognition with the U.S. a reality.
Through mutual recognition, market professionals in foreign
jurisdictions with comparable regulatory standards would be able to
access the U.S. marketplace without registering with the SEC, and
without direct SEC oversight. However, our Ontario contact
expressed concern that the process may be stalled if Chairman Cox
does not remain as head of the SEC past the November U.S. elections,
commenting on the fact that the SEC presently has only three
commissioners (instead of five), including Cox, all of whom are
Republicans. The OSC is cautiously optimistic that mutual
recognition discussions will move forward, at least until November.


2. (SBU) In late March, the SEC had announced its intention to move
forward on developing a discussion framework for mutual recognition
with Canada and the European Union. The OSC and Quebec's securities
regulator, L'autorit des marchs financiers (AMF), representing
Canada's two largest provinces and the bulk of its securities
markets, had been working to this end on Canada's behalf since last
year. When the SEC announced on March 29 that it would move ahead
with formal discussions to develop a mutual recognition arrangement
with Australia, it was a serious disappointment to the Canadian
negotiators. According to our OSC contact, Australia's regulatory
environment is more complicated than originally expected, and less
like the U.S. regulatory environment than Canada's.

3. (SBU) Canada has 13 separate provincial and territorial
regulators, but these jurisdictions' laws and regulations are highly
harmonized through the federal Canadian Securities Administrators
(CSA). Without a legislated "single" or "common" Canadian
securities regulator, the SEC will have to negotiate with each
Canadian jurisdiction through the Canadian Securities Administrators
(CSA) -- an organic association of securities regulators, without
statutory powers -- led by the OSC (ref (A)).

4. (SBU) Immediately following the March 29 announcement that the
SEC would pursue mutual recognition with Australia, federal Finance
Minister Flaherty pointedly reiterated his well-known views on the
need to establish a single national securities regulator in Canada
and has repeated those views publicly since then. Flaherty has said
that Canadian publicly traded companies now incur an unnecessary
C$59 million per year to meet the requirements of 13 separate
securities regulators across Canada. Flaherty will reportedly push
the need to establish a single national securities regulator today
in Montreal during a meeting with provincial and territorial finance
ministers.

NAY

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