E-Governance in the Financial Capital Markets: The Canadian Capital Market Regulatory Environment

The Canadian Capital Markets And The Regulatory Environment

Canada is characterized by well-developed capital markets as evidenced by the fact that the market capitalization of exchange-listed issuers is high relative to Canada’s GDP¹ (Nicholls, 2006). The capital markets consist of a number of individual markets, the most well known are the markets for equities and fixed-income. In Canada, most equities are traded on organized exchanges (i.e., auction markets), primarily the Toronto Stock Exchange (TSX) and the TSX Venture Exchange². In contrast, most fixed-income products are traded in dealer or “over-the-counter” (OTC) markets. According to the World Federation of Exchanges, the TMX Group, with a domestic market capitalization of $1.7 trillion in 2009, was the eighth largest stock market in the world.

The regulatory system for the capital markets in Canada is ranked as one of the best in the world. In 2009, the Organization for Economic Co-operation and Development (OECD) ranked Canada fifth in the world in investor protection. In Canada, the capital markets, and the financial industry more generally, are characterized by extensive use of technology, in fact, much of their business is conducted electronically. Further, most of the information required by regulators (to be distributed to the public or provided to the regulators) is disclosed electronically. These factors make Canada a particularly good example to use to examine the use of electronic governance.