Provinces can take first step to national regulation, says regulator

(April 20, 2004) The road to a national securities regulator could begin with a co-operative agreement involving as few as two provinces, says the chair of the Ontario Securities Commission (OSC). Ontario and Alberta are the two most logical choices, OSC chair David Brown said today following a speech in Toronto promoting the concept of a single regulator.

“It is possible to design a procedure whereby a core group of provinces could come together. They would make it open and inclusive for other provinces to join,” Brown said. “In reality, that’s the way it will likely happen.”

The issue of a single regulator for Canada’s fragmented securities system bubbled to the surface late last year when a federally appointed wise persons’ committee concluded a national regulator was the country’s best option for reform.

Federal Finance Minister Ralph Goodale supported the committee’s views and said Ottawa would attempt to move the recommendations forward. But there’s been little activity since then.

“Ultimately, these are political decisions,” Brown said today. “I think the reality is that we won’t see any activity on this until after a federal election has been called and held.”

Still, Brown says if the provinces can deliver a national regulator, he believes Ottawa would be more than happy to get on board.

“I believe the best solution is for the provinces to come together and many of the submissions to the wise persons’ committee said that was the optimal way to go: a negotiated solution,” he said. “And I think the provincial ministers and the premiers are trying to find a way to make that happen.”

TSX president Barbara Stymiest, who also spoke at today’s luncheon, noted that Ontario Premier Dalton McGuinty has already expressed his support for a national regulator. She adds that while the other provinces aren’t cheering McGuinty’s views, “they’re not saying no either.”

“It is very difficult to argue the case for 13 regulators,” she says. “In my mind, it is in the self-interest of the provinces to take the initiative and join with the federal government to create a single commission.”

Although some provinces favour incremental change through the Canadian Securities Administrators, Stymiest believes the wait for a national commission has already been too long.

“Meanwhile, we are using a horse-and-buggy system designed for the local stock markets of the 19th century,”” she says.

Some industry insiders believe that unless federal and provincial politicians act soon, the current push for reform could be lost, as it was in the mid-1990s. Brown agrees. “It will be huge setback if nothing happens, both domestically and internationally, so we have got to keep the momentum going and we’ve got to see it through this time.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com