Peter Brown, chairman of Vancouver’s Canaccord Capital Corp., has sent a letter to Wayne Fox, chairman of the TSX Group, and various other regulatory chiefs, assailing the increasing cost of regulation and other TSX services.

Brown says that Canaccord has been hit with $2.5 million in TSX fee increases over the past year. Brown argues that these fee increases unfairly favour the large bank-owned dealers over the smaller independents.

The biggest chunk of Canaccord’s fee increases, $1.3 million worth, came due to the creation of Regulation Services Inc. “It is inconceivable that the Exchange can give lip service to the excessive cost of regulation in Canada while passing on such excessive price increases to its members.”

Steve Kee, director Media Relations & Publicity for the TSX, expresses disappointment that Canaccord’s views are being aired in public. “Our numbers do not correspond with his but we will look at the points raised in his letter and will respond to him directly,” says Kee.

Brown argues that the bank-owned dealers can better absorb these higher costs than the independents. He says these fee increases are coming as the TSX faces falling volume, and prepares for its IPO. He suggests that the exchange should be absorbing added costs to protect its members at a time when volumes are low and margins are falling.

“We believe that the TSX should focus on the real issues of the day,” he concludes. “It needs a better vision pertaining to its niche in the world capital markets and the need to create a broad and healthy capital market to service Canada’s needs. In our opinion, the TSX urgently needs to focus on
what changes are needed in the system to attract new members, new listings and greater liquidity.”