Canada is the only developed country without a national securities regulator. And the six panelists at the peer-to-peer roundtable, held Friday afternoon at the Toronto Stock Exchange, were all in agreement that it’s about time this changed.
“A common securities regulator [CSR] would make the regulation of our markets more responsive, more accountable by creating a single decision-making body that would coordinate the views of all jurisdictions and would improve market efficiency, making the system more efficient to operate,” said Finance Minister Jim Flaherty.
Flaherty stressed that this would be a common securities regulator, not a federal securities regulator. The 10 provincial governments, the three territorial governments and the federal government would participate equally.
A CSR would allow Canada to speak with one voice. Although the current Passport System is a “step in the right direction,” according to Purdy Crawford, a partner at Osler, Hoskin & Harcourt, LLP, “the system doesn’t go far enough.” (The first phase of the Passport System was implemented in September 2005. It gave participants certain exemptions when dealing with multiple Canadian jurisdictions, except Ontario.)Crawford said that Canadian securities administrators create policy, but it’s a slow process, and there’s no accountability to one body.
The global scheme of things
“We’re a small country with big capital needs and a large economy,” said Jim Goodfellow, a partner and vice-chair of Deloitte & Touche LLP. He stressed the importance of capital markets: Canada needs capital for its large companies and needs capital to generate new growth. As of 2005, the global capital markets are about $140 trillion, he said. “We’re about 2% to 3% of that.”
But even if we’re 2% or 3%, countries have to work with one another in this global system. “How,” asked Goodfellow, “do you play with 13 in a global context?”
Provincial problems
That’s just it, unlucky number 13. Robert Knox, principal of R.H. Knox & Associates, shed some light on why we can’t get our governments to agree. It’s local interest, he said. Provinces have their own interests: how to protect their own people, their own businesses. “And it’s a legitimate concern.”
But even with 13 regulators, Canada could look to global examples for guidance on implementing a common regulator. “Australia went from a multiple regulator to a single regulator system,” said Poonam Puri, an associate professor at Osgoode Hall Law School, York University. “It’s a jurisdiction we should be paying close attention to because it is similar to the Canadian context.”
Flaherty said he has met with ministers and reviewed the issue and will continue to do so. They will convene in the next six months. “I will be persistent on this issue,” he said.
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