OSC repeats call for national, pan-Canadian securities regulator

(July 11, 2003) The Ontario Securities Commission (OSC) says it’s time Canada moved to a national securities regulatory structure, although not necessarily one run by the federal government. In a written submission to the federal wise persons committee charged with reviewing the country’s regulatory system, OSC chair David Brown reiterated his support for a pan-Canadian commission, controlled by the provinces and territories.

“Attempts to create a national securities commission have foundered in the past because of resistance to the notion of a federal commission,” Brown said in a letter to committee chair Michael Phelps. “Such a significant transfer of authority from provincial to federal hands may be politically difficult to achieve.

“It may be more politically feasible to create a pan-Canadian commission, one that is created by the provinces and territories with the support, co-operation and some involvement of the federal government,” he added.

Brown did not appear personally before the wise persons committee, which held two days of closed hearings earlier this week in Toronto.

A pan-Canadian commission would provide the national focus and harmonization that is needed, Brown argued, without disturbing the existing constitutional distribution of powers or aggravating regional concerns.

“The high cost of fragmentation is a cost Canada can no longer bear,” he stated. “It is time for Canada to speak with one voice,” noting that of the 103 countries represented in the International Organization of Securities Commissions, only Canada and Bosnia-Herzegovina lack some kind of national regulator.

Brown says that although the Canadian Securities Administrators (CSA) has made progress in harmonizing the system through initiatives such as the mutual reliance and review system, the system for electronic document analysis and retrieval (SEDAR), the system for electronic disclosure for insiders (SEDI) and the national registration database (NRD), those projects “cannot substitute for a single national regulator.”

The uniform securities legislation (USL) project, spearheaded by CSA chair Stephen Sibold, is also a significant improvement, Brown adds. But he says it does not go far enough and does not address fundamental questions.

“Even if adopted by all provinces and territories, the USL proposal would still leave Canada with a system in which market participants support 13 different regulators,” he said. Moreover, provincial legislatures would retain the option of changing their own laws and regulations, “ultimately leading Canada back down the path to 13 separate sets of rules.”

What do you think? Is David Brown on the right track for solving Canada’s regulatory conundrum? What, if any, other options do you think would work better? Share your thoughts and ideas in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca