Investors Scrutinizing the Regulators

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Securities Regulation In CanadA

Fox Guarding the Hen House




Investment managers want single regulator

(July 31, 2008) Canada's investment managers want the feds to end the constitutional quagmire and establish an "opt-in" national securities regulator.

The Investment Counsel Association of Canada (ICAC) is urging the federal government to establish a federal regulator using an "opt-in" solution. Their rationale, as stated in their submission to the Expert Panel on Securities Regulation, is that an opt-in option could "overcome perpetual political and legal wrangling that has left investors at risk."

In a submission to the Expert Panel, the ICAC suggested that the federal government should use its power to create a separate national regulatory system that would enable securities issuers and registrants to be registered with and subject to the jurisdiction of a federal regulator. Such a system would then exclude provincial jurisdiction over those participants who opt in.

The ICAC has long advocated the need for a national securities' regulator and has participated actively in promoting the concept. While the organization which represents Canadian investment management firms with over $700 billion of assets under administration would prefer to see a national regulator created. As a result of federal/provincial collaboration, it feels the country can no longer wait for governments to solve their differences.

ICAC's submission focused on eight key advantages to the opt-in model. These include the following:

  • Quickest way forward/least transitional risk

  • Consistency in regulation

  • Enhanced enforcement

  • Cultivation of economic growth

  • Flexibility to respond to future evolution of global markets

  • Reduction in costs

  • Strengthened influence of Canada in international markets

  • Ability to address regional sensitivities