Globalization has long loomed as a powerful economic force. For the most part, its effects have been felt in old-economy industries such as manufacturing, but its demands are starting to reshape the capital markets business, too. And if Canadian firms are to have any hope of competing, our self-imposed bureaucratic barriers must be dismantled.

So far, globalization of the world economy has been an unqualified positive for financial services firms. The availability of cheap labour in places such as China and India has fuelled global growth while keeping inflation low, enabling central banks to keep the world awash in cheap money. Markets have thrived and financial firms have feasted.

However, there are casualties in the march of globalization, — namely firms that no longer compete profitably, and workers who are made redundant as a result. None of that pain has been felt by the financial services industry so far, but globalization is starting to affect the competitive landscape for financial firms themselves, as the industry’s most coveted clients increasingly demand global service.

As a result, the world’s biggest stock exchanges are marrying up in an effort to create global platforms that broaden their product and service offerings, to enable them to keep pace in the trading technology race. Over the next decade, the now for-profit exchanges are also expected to begin competing more directly with brokerage firms in both investment banking and trading, as they seek new revenue sources.

On the retail side, the spectacular growth in emerging markets is creating millionaires in these markets at a faster rate than in the rest of the world. To capitalize on the worldwide increase in the high net-worth investor population, firms must also have greater global service capabilities.

Given the daunting challenge ahead, the last thing Canadian firms need is an added obstacle in the form of a fragmented, unwieldy regulatory regime. Our industry is simply too small to endure needless complexity for the sake of provincial pride. Policymakers must abandon their parochial approach to the Canadian capital markets, or risk ensuring their own irrelevance.