Turn the centralist page
Many people think that the previous f e deral government’s last attempt at setting up a cooperative securities regulator had just one aim: to give that government and Ontario control over securities and derivatives regulation in Canada. We are among those people.
It needs to be remembered that the current structure, which was disparaged by the former federal government, is praised by international agencies, including the World Bank. The latter’s 2013 Doing Business report, a reference in the field, ranked Canada fourth in protecting investors, ahead of the United States ( sixth) and the UK ( tenth). Similarly, the International Monetary Fund’s 2014 report on the Canadian economy highlighted, again, the strength of Canada’s existing system based on provincial jurisdictions.
It is also time to dispel the myth that a single regulator, in whatever form, will stand as an impenetrable bulwark against f raud. After all, didn’t the Enron and Madoff scandals occur in the United States?
There is no real advantage to be had in creating such a body, from either a consumer or a financial industry standpoint. And this is as true in Quebec and Alberta as it is in the other provinces and territories.
With all due respect to those pushing for a single regulator, the financial services industry is well served by the current structure and the current passport system, which enables market participants to gain access to all jurisdictions while dealing with their principal regulator and complying with a set of harmonized laws.
This structure, wherein all the provinces and territories are grouped together in a cooperative entity, the Canadian Securities Administrators (“CSA”), is already a tangible response to the federal project. All of the provinces and territories participate in the CSA, including Ontario, which is a major contributor. With several provinces not on board, the federal project could never claim to speak “with one voice.”
This structure has the further advantage of respecting constitutional jurisdictions while providing flexibility and autonomy of reflection and action in keeping with regional differences. Canada has an efficient national system, although not centralized under the control of the federal government.
Canada is well served by the current system and the previous federal government’s project would have been a clear step backwards, resulting in more red tape and costs as well as a whole range of economic consequences. The regulators, including the AMF and the ASC, play an important role in the financial and economic ecosystem, taking actions that make markets more efficient and create healthier conditions for investment. It is important to preserve this flexibility. It is better to expend energy on strengthening the current system, which works, than to create something that will not work.
Exactly four years ago, the Supreme Court clearly indicated that securities regulation was the purview of Canada’s ten provinces and three territories. Let us hope that the new Minister of Finance, who has made a personal commitment to bring new leadership, a new tone and a renewed sense of collaboration to Ottawa, will be attentive to the real needs of industry and consumers.
CANADA’S FINANCIAL MARKETS ARE WELL-SERVED BY THE
CURRENT STRUCTURE.