Market enforcement has been toughened up dramatically in Canada in the past four years, says TSX Group CEO Barbara Stymiest.

In prepared remarks for a speech Wednesday for Canada Day, the TSX road show in New York, Stymiest details the enforcement roles of Market Regulation Services Inc., the Investment Dealers Association, the newly created Integrated Market Enforcement Teams, and the beefed-up federal laws against illegal insider trading.

“The result is a system that is remarkably transformed from what it was as recently as four years ago, one that is as robust as that of the U.S., especially since the significant strengthening in Canadian laws related to white-collar crime and the addition of police resources,” she says. “The evidence lies not just in the added dollars being applied to enforcement but also the sharp rise in the number of insider cases being reviewed by regulators and prosecutors compared to only four years ago.”

She assails the media for failing to report this good-news enforcement story. “The financial press has preferred to stick by the quite different story of the 1980s and 90s when enforcement in Canada, just like in the United States, was substantially weaker than now,” she says.

She also blames the media for missing the good news in inter-listed trading. “We capture a lot of collateral benefit when it happens, especially in the trading of Canadian-based inter-listed stocks. That isn’t something that’s usually recognized either here or even in Toronto, where the media tend to equate a Canadian company’s cross-listing in New York as akin to Ross Perot’s great swooshing sound of jobs heading south,” she says. “That’s a result of the myth that all the liquidity in inter-listed shares is in New York. Our own research demonstrates that a cross-listing is a win-win for both New York and for TSX.”

Stymiest reports that this year the TSX’s share of inter-listed trading is 67% vs 69% for all of last year. The value of trading on an average day this year is $2.9 billion, up from $2.1 billion last year. “So a rising New York market is just fine for us and TSX issuers who want to inter-list on NYSE are just fine, too, though there aren’t many doing so these days. The mixed part of the blessing is that all the fireworks on Wall Street divert attention from some great investment opportunities in Canada,” she says.

She notes that since the beginning of 1998, the S&P/TSX composite index has outperformed the S&P 500 year after year. Nine of 10 of sub-indices have out-performed their U.S. counterparts, the exception is the tech sector. Last year, the 20% rise in the Canadian dollar boosted relative returns.

Many American investors missed these opportunities, she notes. “Our research among institutional investors in the U.S. and Europe suggest that only half as many U.S. investors as Europeans are aware of the TSX and the market we provide. Yet, since the late 1990s, Toronto Stock Exchange has been among the best-performing markets in the world in the best-performing economy in the industrial world, with seven years in a row of federal surpluses driving the transformation of Canada from capital importer to capital exporter.”

But Canadian investors have been staying closer to home. “Our latest in-depth survey of shareowners shows a steady decline in the percentage of Canadian shareowners’ holdings in foreign markets, and declining interest in trading through Nasdaq Canada,” she says. “Our share ownership study found that, after a decline in the number of adults investing directly in shares or in mutual funds, from 49% of adults to 46%, confidence has returned to its pre-bubble levels at 49%.”

Also as part of the road show are 12 Canadian issuers providing their own outlooks during morning sessions. The luncheon session, hosted by Canada’s Consul General to New York Pamela Wallin, features: Stymiest; Peter Jewett, senior partner Torys LLP, who will speak about corporate governance; and, Sam Stovall, chief investment officer, Standard and Poor’s, who will provide an investment outlook for the U.S. and Canada.