Speaking at the Securities Super Conference today in Toronto, TSX CEO Barbara Stymiest, reiterated familiar themes including: how to strengthen corporate governance in Canada; the possibility of mutual recognition by stock exchanges as a way to globalize trading; and a regulatory approach that favours principles over rules.

Stymiest argued that global markets require a regulatory approach founded on principles that embrace national market differences as not only inevitable but essential. “We will work to see that it is accepted on a global basis, not just within Canada or Europe,” she said.

“That potential for success on a global basis, I suggest, lies in a parallel to what we have achieved in this country over the last decade,” she said. “We have established a Canadian culture founded in principles that leaves it to companies to choose whether, when and how to put those principles into practice with the over-riding proviso that they disclose what they have decided and why so that investors determine the risks they face.”

“Our best opportunity to create global markets that are open and stable also lies, I believe, in a similar principles-based approach that allows exchanges and regulators in each market to reflect national differences in the approaches they take to putting those principles into practice,” she noted. “The effect of that, I suggest, will ultimately be to bring national markets into closer and closer convergence. That is the natural consequences of best practices in one country providing demonstrable competitive advantages and lower capital costs.”

Stymiest argued that the alternative, to try to eliminate national differences as a basis for opening up markets, will lead, “to the wedges that are already dividing global markets, and greater protectionist barriers between markets, not lower barriers.”

“Sarbanes-Oxley has been a tap on the shoulder, in other words, a warning that this is the fork in the global road that we should not take. We need to heed the warning,” she concluded.