Will Canada ever have a federal securities regulator?

"Canada is currently the only G-7 country without a common securities regulator, and Canada's investors deserve better." -- Rodrigo de Rato, IMF Managing Director 2004-2007

We couldn't have echoed the words better ourselves, particularly in Canada's political climate. Love, hate or apathy toward the Conservatives aside, Flaherty's pet project since his party became government has to be respected. There really should not be doubt in the minds of most that a national securities regulator will make this country's investment climate better and more efficiently regulated. The inclusion of a national securities regulator, in some form, in the Conservatives' recent budget was taken with a huge sigh of relief. It actually seemed like things were going to get done. Now, of course, reckless politics has put this noble endeavour into jeopardy, and Canada is not better for it.

Canadian securities regulation is currently conducted by 13 provincial or territorial securities commissions, which are regulatory agencies of their respective provincial government or territory. Their job is to protect investors, as well as promote fair and efficient business practices, which is done by enforcing their province's Provincial Securities Act -- a set of laws and regulation outlining what participants in the market can do.

It is intuitive to realize that monitoring the securities regulation for 13 different jurisdictions is cumbersome at best. At worst, Canadian public companies, who are looking for either equity or debt financing, have to consider the costs of complying with 13 different sets of rules. These additional costs particularly hinder smaller companies, which can be argued are in greater need of capital in order to grow. Furthermore, quite simply, paying thirteen groups of people to do the same job, is a terrible use of resources. Particularly, considering there are more individuals earning six figure salaries in the Ontario Securities Commisssion than there are in the SEC. How much of taxpayers' money is being spent on these thirteen regulators when the job can be done with one?

The International Organization of Securities Commissions, IOSC, comprises of 182 members, which make up 90% of the world's securities markets. Of those 182 members, only Canada and Bosnia do not have a national securities regulator. What a pair! It can be easily observed from the quote above that our situation is viewed as fragmented by the international community. A united front will surely give Canada a stronger voice in the regulation debate, which is now a vital global issue. What's the problem? Well, by several accounts, the Ontario Securities Commission seems to take the lead on the majority of the initiatives. It is due to this influence that several other provincial securities commissions, particularly British Columbia, Alberta and Quebec, fear that a national securities regulator will mean ceding their influence to the Ontario Securities Commission. To them, it seems to be a question of maintaining their autonomy.

On November 20th, we celebrated a Canadian Heritage Day, the birthday of Wilfrid Laurier, one of the greatest Prime Ministers in Canadian history. Laurier presided over a time in which this great country came into its own as its people witnessed the expansion of the West and a significant wave of immigration. But, it was his attitude toward conciliation that cemented his legacy and drew the admiration and awe of many. That same week, hearing the Throne Speech outlining the government's agenda for the coming year, it was so easy to think: How fitting that the federal government is now going to sit down with the provinces and figure this out.

Unfortunately, the rejoice was shortlived. Hopefully, with Parliament set to reassemble next month, not for long...At a time of great change in the world economy, isn't it time Canada got on with it?