Madam Speaker, I will begin by thanking my Canadian Alliance colleague, the member for Prince George--Bulkley Valley, for agreeing to switch positions with me.
I am pleased to take part in the debate on Bill S-40 for the simple reason that the bill's purpose is to modernize the securities sector. The Montreal Stock Exchange, which recently became the only derivatives clearing house in North America, will therefore be able to benefit from this bill. In fact, all key players at the Montreal Stock Exchange worked very hard to move this bill forward and ensure that its wording would satisfy the objectives of both the Montreal Stock Exchange and the Canadian Derivatives Clearing Corporation.
First, I wish to congratulate Luc Bertrand, president of the Montreal Stock Exchange, Giovanni Giarrusso, first vice-president and general manager of institutional affairs, and Michel Favreau, first vice-president and chief of compensation. I wish to commend them for their excellent work, for their contribution to the debate and for the necessary changes incorporated in Bill S-40 with respect to the proper conduct of operations at the Montreal Stock Exchange and the clearing corporation.
As I mentioned, the Montreal Exchange is the only derivatives market in Canada. It has a wholly owned subsidiary known as the Canadian Derivatives Clearing Corporation, whose job it is to clear financial transactions involving derivatives.
What does clearing mean?All it means is that when there is a transaction involving derivatives, in other words, when there is a seller of derivatives and a buyer, the clearing house, in this case the Canadian Derivatives Clearing Corporation, ensures that the buyer is able to pay the seller and that the seller is able to receive the money from the buyer. This is referred to as clearing a transaction.
There is a problem with how the Canadian Derivatives Clearing Corporation operates, one that Bill S-40 will rectify. Before, the corporation did not afford the same legal protection to buyers and sellers as other clearing houses in North America. In a field that is fiercely competitive, the situation can arise—and this is what has happened to the Montreal Stock Exchange and to the Canadian Derivatives Clearing Corporation—where derivatives from Canadian companies are listed on foreign exchanges, particularly in the United States, and if they have a clearing house, it is easier to go through an American stock exchange clearing house, instead of using the Canadian Derivatives Clearing Corporation.
This is easy to do, because this is a competitive environment, and made even easier because, without the proper legal protection, the Canadian Derivatives Clearing Corporation was at a disadvantage, since the derivative seller, seeing the increased risk in trading through the Canadian corporation, preferred to trade with American clearing houses.
Once passed, the bill will rectify this problem. I invite all of my colleagues in the House, from all political parties, to support it, because we will solve this problem. We will provide the Canadian Derivatives Clearing Corporation with the competitive capacity it should have had from the outset. We will level the playing field and allow the corporation to face the music and compete with all of the other North American clearing houses.
Passing Bill S-40 will allow the Montreal Stock Exchange to make a major investment in the automated derivatives system.
This would be a first in America. It will also allow investments to increase the growth of transactions on derivatives and will raise the credit rating of the Canadian Derivatives Clearing Corporation.
There will also be—and this is where the beauty of this bill lies—impacts both upstream and downstream, among them the creation of skilled workers. As we know, the financial sector requires ultra-specialists.
The new environment created by increased prospects at the Montreal Stock Exchange and the Canadian Derivatives Clearing Corporation will attract such specialists. It will be far easier for the Montreal Stock Exchange to attract such workers, who are hard to find, even elsewhere in North America.
Given all the advantages offered by Bill S-40, I therefore encourage my colleagues in all parties, in opposition as well as in government, to vote in favour of this bill. As I have said, it will give new life to the Montreal Stock Exchange as a specialized derivatives clearing house, and to the Canadian Derivatives Cleaning Corporation, a wholly-owned subsidiary of the Montreal Stock Exchange.
Once again, congratulations to all those who have contributed to the drafting of this bill and those who are going to vote in favour. I thank them all in advance.
