Canada’s provinces will continue to have a hard time making agreements with foreign regulators if they continue to rely on mutual recognition to harmonize securities regulations among themselves says TSX Group CEO, Barbara Stymiest.

“In the context of how we are seen from abroad, however, it is not clear how we will be able to transform mutual recognition into a working principle on an international basis given what has been proposed so far,” she said in a speech given in Toronto on Friday, regarding the passport model that is being contemplated by Canada’s provincial finance ministers.

Stymiest suggested that there are already signs that although the U.K. and the EU may be supportive of mutual recognition, they are not sure how it would work with 13 regulators to negotiate with. “Or, as some officials have put it, the U.K. is not willing to open up the British market to one Canadian province.”

She added that China is raising similar concerns. “In our talks with officials there, they raised the difficulty they had some years ago in negotiating a memorandum of understanding on securities with four Canadian provinces. The process took seven years. The Chinese have expressed to us their clear determination not to involve themselves again in such a complicated negotiating process — though they, too, are willing to consider an agreement with Canada as a single market.”

“It is not difficult to see the Chinese or EU perspective on this. Some 25 national regulators in the EU, as of next year, are unlikely to find it’s worth their effort to negotiate 13 separate agreements with provincial and territorial regulators,” she said. “Do the math. It would take more than 300 agreements. Even if a number of these agreements are similar or identical, the payoff for such an effort is at least in question.”

“It’s possible that the provincial, territorial and federal officials examining this problem will come up with something we haven’t thought of. But so far we haven’t seen anything that would respond to the clear signals from abroad that they would prefer to deal with a single Canadian regulator on mutual recognition and other issues — whether that single regulator is provincial, a mix of federal and provincial, or federal,” Stymiest said.

She also took a shot at rival Nasdaq, noting that it, “seems to vastly prefer our having a fragmented regulatory system. Nasdaq has clearly learned how to play one Canadian regulator off against the other so they can be picked off one at a time. Right now that’s happening. Three of our regulators — not including Alberta — have agreed or proposed ways that will allow Nasdaq to operate in Canada under U.S. rules without requiring that Canadian exchanges be able to operate in the U.S. under our rules.”

“So I want to emphasize that we want mutual recognition — not unilateral recognition of other people’s standards without their recognizing ours. Unilateral recognition won’t produce a more open, lower cost and competitive Canadian market. To the contrary, it will tilt the rink so the home team always has to skate uphill,” she said.