Financial scandals such as Sino-Forest, YBM Magnex and others will continue to occur in Canada. Lessons were not learned from the YBM Magnex fraud and TSX China listings fiascos of the 1990s. Lessons that are not learned are invariably repeated. The TSX and TSX-V continued to promote emerging market listings throughout the past decade without proper consideration of the risks to Canadian investors and market integrity. In the past year, Canadian investors have suffered multi-billion-dollar losses from investments in Sino-Forest and numerous other China listings on the TSX and TSX-V. Even with the emerging market listings scandal at its height, the TSX has continued to promote listing in Canada to Chinese emerging companies.

More than a decade has elapsed since the TSX demutualized and become a for-profit entity. The TSX and regulators did not address the conflict of interest in listing regulation then and, 12 years later, they are continuing to defer action. The new draft Recognition Orders for Maple, TSX and TSX-V would appear to be the perfect opportunity to correct a long standing regulatory gap. It is unfortunate that regulators have not seized this opportunity to fulfill their responsibility to protect investors by ensuring that the exchanges appropriately manage inherent conflicts of interest.

Click here to read about FAIR Canada and other stakeholders’ submissions on the Draft Recognition Orders and our recommendations.