Single securities regulator forecast for 2005

(February 23, 2004) Canada could have a single national securities regulator in place as soon as next year, says the executive director of the wise persons’ committee (WPC). But Elizabeth Harrison concedes such an ambitious timetable depends on political agreement at both the federal and provincial level — and that’s far from a sure thing.

“I am optimistic that we will see visible progress this year and that we will see a single regulator in Canada by 2005,” Harrison predicted today at a securities conference in Toronto sponsored by the Canadian Institute.

The WPC released its much-anticipated report on regulatory reform last year, calling for the creation of a single national regulator. Reception to the report has been warm, Harrison said, with the “predictable” exceptions of Quebec and British Columbia.

Supporters of the federally appointed committee’s call for a national regulator include federal Finance Minister Ralph Goodale, Ontario Finance Minister Greg Sorbara and TSX president Barbara Stymiest, Harrison noted.

“Everyone agrees that the current system is outdated and ill-suited to today’s capital markets,” Harrison said. “Reform is needed urgently.”

Perhaps, but the political will to champion such reform is lacking, suggested Canadian Securities Administrators (CSA) chair Stephen Sibold, who took part in a panel discussion today at the same conference, along with regulators from British Columbia and Ontario. Sibold, who also chairs the Alberta Securities Commission, noted that only one province — Ontario — is publicly advocating a national regulator.

Sibold is focusing his efforts on the uniform securities legislation project (USL), a CSA attempt to harmonize securities laws across the country. “USL is the only practical reform on the table,” he said.

Similarly, Doug Hyndman, chair of the British Columbia Securities Commission, has reservations about the WPC’s conclusions. “Our biggest concern is around regulatory innovation and sensitivity to small issuers,” Hyndman said today, adding that none of the current national reform proposals under consideration are focused on regulatory content, an initiative B.C. is tackling with its plan to streamline and simplify securities rules.

On the political front, Hyndman is also sceptical, noting that his own government has made some “negative noises” about the WPC. He points out that the topic of securities reform did not even make in on the agenda of the last federal-provincial meeting of finance ministers.

Considering the current political climate in Ottawa, the subject likely won’t be discussed until after a federal election, said Paul Moore, vice-chair of the Ontario Securities Commission. “I think 2005 might be a bit ambitious,” Moore said, predicting at least a year of public debate on the topic.

Still, the WPC’s recommendations should be taken to heart, Moore said. “The constituents have spoken, we heard that loud and clear,” he said, noting that 74% of those submitting responses to the committee recommended a single regulator.

Asked why she believes a national regulator remains feasible in the face of political opposition, Harrison pointed to a “real demand for change across the country” among market participants. “They are not going to let this die.”

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