A head office by any other name would smell as sweet (or foul), and no reasonable provincial government would decide against joining the proposed Canadian Securities Regulatory Authority because its chief regulator and most of its staff would be based in the Canadian city with the largest financial markets - which at present is Toronto. A plan made public on Tuesday, however, would leave the future national securities without a head office.
The CSRA is highly desirable. It would end most, if not all, of the inefficient, inconvenient and downright embarrassing fragmentation of Canada's regulation of capital markets. Douglas Hyndman and his colleagues at the Canadian Securities Transition Office deserve praise for bringing that goal closer, with a launch date of Canada Day, 2012. It is to be hoped that the courts will have dealt with the constitutional questions well ahead of that time, allowing the CSRA to become a reality.
The present governments of Quebec and Alberta are resolved not to opt in, and Manitoba is so far staying on the sidelines. The federal government, seven provinces and three territories have been taking part in the transitional process. Even without Alberta and Quebec, a change from 13 Canadian securities commissions to only three would be a great improvement. It is hard to believe that any province would defect from this project, if it were to be acknowledged that Toronto will have much the largest CSRA office.
At one point, the Hyndman plan says, "Communications technology allows some work to be done at great distances, but there is no substitute for a physical presence." Later, it says that the CSRA's leadership and senior management "will need to be highly mobile" but will rely on "technology infrastructure (such as videoconferencing and intranet)."
The death of distance has been much exaggerated, and physical presence on Bay Street, Toronto, will matter - as will regional offices elsewhere.
Not so long ago, Montreal was a larger financial centre than Toronto, and Toronto may well eventually be surpassed by Vancouver or Calgary, in which case the CSRA's head office - whether de facto or de jure - should then move west.
Now, the work forces of Canada's securities commissions range from Ontario's 479 to Prince Edward Island's three, which gives a rough but realistic estimate of where the bodies are needed.
The rest of Canada - beyond Bay Street, that is - will not be deceived by the tokenistic gestures of a securities commission with no physical centre. The CSRA should have an avowed head office in Toronto.