The politics of financial services liberalization: The case of the Canadian investment dealer industry

The purpose of this paper is to explain the factors and processes which, in 1986-87, gave rise to the decisions by the Canadian federal and provincial (Ontario and Quebec) regulatory authorities to liberalize entry into, and ownership of, the investment dealer industry in Canada. These decisions, ra ther narrowly based as they were, nonetheless would be a watershed with res pect to the subsequent deregulation of the traditional four-pillar structur e of the Canadian financial services industry. The traditional four pillars -which were legally and functionally separated-comprised the chartered bank s, the trust and mortgage loan companies, the life insurance industry, and the investment dealers. The liberalization decisions by the governments per mitted the other elements of the four pillars, and nonresidents as well, to have equity participations in member firms of the securities industry. Thi s represented a fundamental reversal of the beliefs, values, and ideas surr ounding the four-pillars doctrine. The period of history examined extends f rom 1969 to 1987.