June 28, 2012 – In the wake of a setback from the Supreme Court of Canada, Ottawa is forging ahead with the idea of creating a national securities regulator using a cooperative approach that could pay off, according to a new report from the C.D. Howe Institute. In “Finding Common Cause: The Renewed Quest for a National Securities Regulator,” author Jeremy Fraiberg assesses the chances of reaching federal-provincial agreement on creating a common regulator and having provinces come on board.
“The goal is feasible and desirable in view of the shortcomings of Canada’s current collection of 13 provincial and territorial regulators,” notes Fraiberg. “It remains to be seen, however, which provinces will cooperate with the federal government and, if so, on what terms.”
Although the Supreme Court ruled Ottawa’s proposed Securities Act was unconstitutional, it nevertheless endorsed the possibility of a national securities regulator based on a model of co-operative federalism. Ottawa’s decision to forge ahead is welcome news, according to Fraiberg. Canada is the only developed country in the world without a national securities regulator. The current system, he says, suffers from a number of infirmities: policy development that is bogged down by the need to gain consensus among multiple jurisdictions; inconsistent enforcement and investor protection; duplicative and inefficient compliance costs; the lack of a single point of accountability, which impairs the regulation of systemic risk; and the inability of Canada to speak with one voice internationally.
Fraiberg discusses the potential for agreement by Ontario, British Columbia, Alberta and Quebec – which have the four largest and most important securities regulators – and notes that Quebec would be unlikely to participate. As a result, a passport system – which would harmonize and allow for mutual recognition of regulatory requirements – could be implemented between the national regulator and Quebec.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada's trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada's most influential think tank.
Click here for the full report.
For more information contact: Jeremy Fraiberg, Partner, Osler, Hoskin & Harcourt LLP; or Philippe Bergevin, Senior Policy Analyst, C.D. Howe Institute; 416-865-1904, email:cdhowe@cdhowe.org.