Friday, January 30, 2009
Shoring up support among the provinces
for the creation of a national securities regulator is likely to
include direct compensation for lost fee revenue, and could see the
head office based wherever the current chairman resides.
Zordel, Member of the Expert Panel on Securities Regulation &
Partner with Cassels Brock's Securities Group, speaks during a panel
discussion about the right securities regulation model for Canada in
Compensation would come from the $154-million set aside in this
week's federal budget to ease the transition to a national regulator
from the country's 13 provincial and territorial securities stock
watchdogs, people close to the process say.
Heather Zordel, a partner at the law firm Cassels Brock who was a member
of the panel chaired by Tom Hockin that laid out a plan this month for
the federal government to establish a national securities regulator,
noted that compensation payments were made to states and territories
that lost fee revenue when Australia moved toward a national regulator
for a wide range of financial services providers and products in 2002.
"Everything's open for negotiation," she said, adding that she now
speaks as a lawyer in private practice, rather than as a member of the
Expert Panel on Securities Regulation in Canada.
Three provinces, Quebec, Alberta and Manitoba, have objected strenuously
to the creation of a national regulator, threatening to take their
complaints of lost jurisdiction to the Supreme Court of Canada.
But observers say some provinces are also eager to protect the surpluses
they receive from the annual fees provincial and territorial securities
commissions collect from companies and brokers.
According to figures compiled by the Investment Industry Association of
Canada based on provincial securities commission annual reports, five
provinces, including Alberta and Manitoba, recorded a combined surplus
of $28-million in the past fiscal year.
"This is a major budget item," for some provincial governments, says Ian
Russell, president and chief executive of IIAC.
"Some of that [federally budgeted] $154-million is earmarked to pay the
provinces... as a quid pro quo for stepping into the national securities
regulator," he said. "It will fund the infrastructure of this regulator,
but it will also fund the terms and conditions of some of the
Greg Selinger, Manitoba's minister of finance, said Friday that the
money is a "non-issue" in his province's objection to a national
securities regulator. He maintains that the real fight is over
jurisdiction, and that the desire of some provinces to continue
developing the 'passport' system that recognizes regulations of other
provinces across the country. All provinces except Ontario participate
in the 'passport' system.
The loss of fee revenue "wasn't the issue at all," said Mr. Selinger.
"That wasn't at the heart of it."
There are other inducements aimed at luring the provinces into a
national regulator, including a decentralized structure that could
result in the headquarters being based wherever the current chairman
That option was raised by Ms. Zordel, the partner at Cassels Brock,
during a panel discussion Friday at the Toronto Board of Trade.
"It's an idea and it's worth considering because it addresses one of the
core perceived weaknesses" in previous proposals that selected Ottawa
for the headquarters, Ms. Zordel said in an interview following the
"It used to be that you had to get on a plane and fly to a head office
somewhere. Now you can do this by video conference, you can do a lot by
e-mail," she said, adding that it can be more productive to "multi-task"
with e-mail than to try to track down a colleague who sits 10 feet away.
Allowing the head office to shift around the country would also deepen
the talent pool, she said, because it would "allow somebody who's a
really qualified person [but] who doesn't want to move cities apply for