It looks as if Canadian authorities, heavily nagged by investment dealers, won't allow the competition that a de-regulated financial system would produce. And by protecting the puny investment dealers, the authorities might switch the whole Canadian securities industry into a siding.
Banks are about to be admitted to the securities business. But how far they'll be let in remains uncertain. Foreign securities houses will be allowed to take larger minority positions in Canadian investment dealers and open (small) wholly-owned operations in Canada.
Already a significant chunk of Canada's securities trading is done outside the country. The billion-dollar exempt market, which handies Government of Canada bonds, issues by the provinces, municipalities and toprated banks, trust companies and life insurance companies, (in fact, the country's best credits), has an offshore player, Salomon Brothers in New York. "They're one of the biggest players in the market," said George Neal, the executive vice president in charge of Bank of Montreal's new capital markets subsidiary.
Financiers have been waiting for the publication of the Province of Ontario's draft regulations for the securities industry, due out in late October. By January they should be in operation. Under Canadian law, the provinces run the securities markets while the federal government looks after commercial banking.