Barbara Shecter, David Akin and Claudio Cattaneo , with files
from Canwest News Service
Monday, January 12, 2009
chair of the Expert Panel on Securities Regulation releases the
panel's Final Report and Recommendations for a national regulatory
system during a speech to the Vancouver Board of Trade.
A blue-chip panel Monday proposed a decentralized single national
securities regulator it says Canada needs to better protect investors
and operate in the global business world. However, despite nods to
provincial expertise and promises to maintain a presence in regions
across the country, the Finance Ministers of Alberta, Manitoba and
Quebec immediately objected to the plan, threatening legal action
because they would lose their jurisdiction over regulation.
"We don't think we should have to cede jurisdiction," said Greg Selinger,
Manitoba's Finance Minister. He said Manitoba would hope to avoid a
legal confrontation but would consider joining a challenge led by
Alberta's Finance Minister, Iris Evans, said her province "will continue
to oppose, through all available avenues, including legal action if
necessary, any move toward establishing a single national regulator."
Jean Charest, the Quebec Premier, reiterated Quebec's longstanding
opposition to a national securities watchdog. He stressed that such
regulation is provincial jurisdiction regardless of legal opinions
obtained by the panel that said the federal government could act
because, under the Constitution, Ottawa is allowed to regulate trade and
"We're going to wait and see what their proposal is going to be exactly
and we intend to defend our jurisdictions," Mr. Charest said, noting he
hasn't read the report. "No matter what the report says, it doesn't
change a thing about the jurisdiction. This is a provincial
According to the road map commissioned by federal finance minister Jim
Flaherty and unveiled Monday by the Expert Panel on Securities
Regulation, if provinces opt not to sign on with the new national
regulator, the federal government should simply bypass the commissions
and invite market players -- pension funds, publicly traded companies
and others -- to ignore provincial commissions and sign up with the
"The recent turmoil in capital markets has made it even clearer that
Canada needs a single securities regulator that can move with greater
speed alongside other domestic and international regulators to address
financial instability," said the panel's chairman Tom Hockin.
Mr. Hockin released a 100-page report and some draft legislation for
Ottawa to consider.
Some observers hailed it as the closest Canada has come to replacing its
patchwork system of 13 provincial and territorial securities commission
since the idea was first considered in he 1960s.
"The opportunities are too great [and the] stakes too high to simply
muddle through again," Mr. Hockin said in a speech in Vancouver. "We can
have paralysis by analysis or we can have reform and action now."
The proposal calls for a de-centralized approach that would distribute
vice-chairmen across regional centres and maintain provincial
specialties such as mining in British Columbia.
"We don't want an OSC on steroids," said Mr. Hockin, adding that the
consolidated regulatory regime would nonetheless result in better
enforcement, quicker response to problems. and a single set of fees.
Ian Russell, president of the Investment Industry Association of Canada,
said a single regulator appears closer to reality than at any time in
the four decades leading up to Mr. Hockin's report. However, he conceded
that a confrontation over opting in or out of the regulator lead to a
drawn out court ruling.
"At the end of the day, they may seek a ruling from the Supreme Court of
Canada," said Mr. Russell, whose group lobbies for the investment
Ontario has long supported the creation of a national regulator, and did
not join a "passport" system along with other provinces based on mutual
recognition of regulatory systems.
Monday, Dwight Duncan, Ontario's Minister of Finance, applauded the
Hockin Report and said the Ontario government expects the regulator's
headquarters to be in Toronto, home to most of Canada's investment and
mutual fund dealers and the third-largest financial centre in North
The Hockin panel proposals also won support from industry groups
including the Canadian Bankers Association (CBA) and the Canadian
Council of Chief Executives.
"The Expert Panel has put forward a realistic and workable plan that we
strongly support, said Nancy Hughes Anthony, president of the CBA. "We
have been debating securities regulation in Canada for decades: enough
is enough. With this report the debate is over, it's time to get this
She said the CBA was pleased with the panel's conclusion that the
current fragmented structure makes it difficult for Canadian securities
regulators to react quickly and decisively to capital market events and
makes Canada vulnerable to market and reputational risks.
Big fund managers who back the plan said the proposed national regulator
would lead to much tougher enforcement of securities laws with more
prosecutions and heavier penalties.
"Certainly one of the hopes is that enforcement will be better. Canada
has at times been a bit of a joke," said Wayne Kozun, who manages
$30-billion in public equities investments for the Ontario Teachers
The pension manager said the current regime lacked "teeth" and created a
perverse incentive to commit financial crime, "if you think you can get
embezzle a million dollars and get away with a slap on the wrist."
Mr. Kozun said the balkanized structure of securities oversight in
Canada created a "risk premium" on the country's stocks and undermined
With files from Eoin Callan, Financial Post