The West versus the rest on regulation

With just eight months on the job, the new head of the Alberta Securities Commission (ASC) isn’t ready to be pinned down on whether he thinks it’s time to pursue a national regulator. But without tipping his hand, Bill Rice seems to favour limited reforms like the passport system over the more ambitious uniform securities legislation project.

“Do you keep the passport system or blow it up and start anew?” Rice said in a speech to the Economic Club of Toronto on Wednesday morning, without offering his own opinion. Still, the emphasis Rice gave in his speech to the regional differences that distinguish Canada’s 13 regulators suggests he is not ready to see the ASC absorbed into a national regulator.

“The differences in approach are significant,” he told the small, yet prominent Bay Street crowd. He listed several of them. British Columbia appears to prefer a principles-based approach, Quebec wants to protect its own market, Bay Street favours its relationship with Wall Street over its association with the rest of Canada, while Alberta is more entrepreneurial in spirit.

Albertans, he adds, are concerned by the notion of a single regulator because they fear they will lose opportunities that have assisted the province’s development in the past.

Despite these differences, Rice reports the Canadian Securities Administrators is making progress. “It’s a good system that continues to get better,” he says. He also gets the sense of a more unified direction coming out of the provinces on the CSA.

“At the moment we seem to be in an environment where there is momentum in our current system to get to where people want to go and I wonder whether it would be prudent to get to something new,” he explains. “But if the something new is a better way to have healthy markets in Canada I don’t think as a securities regulator that is not what should happen.”

The securities commissions are working together and compromising despite the apparent perception that they are not, due mainly to Ontario’s reluctance to support the passport system, which would provide one-stop shopping for issuers and registrants, he adds.

“I think the negative implications of this circumstance can be overblown,” he says. “In Ontario there is a somewhat more patient attitude being projected along with a seemly greater inclination to listen.” Ontario, he notes, has been a significant contributor to harmonization efforts which has raised hopes that it will find a way to accept the passport system, without feeling it has to overhaul its own system.

Speaking specifically about the ASC, Rice is mindful of the danger of over regulating. And although Rice cautions about becoming too proactive, like the Securities and Exchange Commission in the U.S., which he called “exhaustive and exhausting,” he says there will be evidence of a more proactive stance from the ASC during his watch.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(02/22/06)