13 January 2009
B. C. Finance Minister Colin Hansen has endorsed a proposal to replace
Canada’s system of provincial securities regulation with a national
GLENN BAGLO/ VANCOUVER SUN
“We believe that the objective of
national regulation is the right objective,” Hansen told reporters
Monday after a federally appointed panel unveiled a new proposal for
national regulation at a Vancouver Board of Trade luncheon.
He confirmed that his endorsement
amounts to approval in principle, but he said he wants to “look at the
specifics” to ensure B. C.’ s interests are recognized.
The proposal was announced Monday by
panel chair Tom Hockin, who was appointed by federal Finance Minister
Jim Flaherty in February to recommend a system of national regulation to
replace the current regime, which consists of 13 provincial and
“A system of 13 separate regulators is
too cumbersome, too fragmented, and too slow,” Hockin told the luncheon
attendees at the Hyatt Regency Hotel.
Until now, the B. C. government has
been opposed, or at least lukewarm, to national regulation. But Hansen
said Victoria has moderated its position due to the panel’s stated
intention to focus on outcomes-based regulation, favoured by the B. C.
Securities Commission, rather than detailed prescriptive rules, which
had been favoured by the Ontario Securities Commission.
He also said the B. C. government is
encouraged by Hockin’s promise of a “ truly national” regulatory regime,
with strong regional offices to ensure that B. C.’ s interests are not
subsumed by Ontario.
In a potentially controversial
provision, Hockin’s proposal would permit investment dealers and
corporate issuers in a province that has not signed on to the national
system to bypass provincial commissions and deal directly with the
This provision, aimed at injecting some
muscle into the proposal, would effectively pre-empt provincial
regulators who do not sign on to the new system, and unilaterally turn
what has historically been a provincial jurisdiction into a federal
Hockin’s report says the committee
obtained legal opinions confirming that the federal government “ has the
constitutional authority to do so.”
Hansen said he is concerned about this
provision, but remains optimistic the move to national regulation will
be based on consensus, rather than compulsion. Under the current system,
each province and territory has its own securities commission and its
own securities act, which means every company or dealer that wants to do
business in multiple provinces has to submit multiple filings and obtain
multiple approvals. The result is a highly redundant, inefficient and
Provincial regulation also means that
trading suspensions imposed in one province do not apply in other
provinces unless those other provinces make specific reciprocal orders.
Also, due to varying competencies and capacities of provincial
regulators, enforcement is uneven.
Over the past several decades,
countless committees have recommended various systems of national
regulation, but these recommendations have been historically opposed by
Quebec, Alberta and B. C.
While B. C. appears to be relenting,
Quebec is still resisting on sovereignty grounds, and Alberta sees no
need to relinquish its provincial authority.
“Alberta remains steadfastly opposed to
a single federal regulator,” Alberta Finance Minister Iris Evans said in
a release Monday.
“We will continue to oppose, through
all available avenues, including legal action if necessary, any move
toward establishing a single national regulator.”
Evans said Alberta favours a passport
system, which all provinces except Ontario have officially adopted in
lieu of national regulation. The system involves harmonization of rules
and mutual recognition of orders.
“Alberta and most other provinces and
territories have done a tremendous amount of work over the past four
years to build the passport system, and this recommendation is an
obstacle to that progress,” Evans said.
Flaherty has made national regulation a
personal crusade. In previous years, he has cited weak securities
enforcement as the main reason. More recently, he has cited the global
Hockin’s report reflects this concern:
“ If the current economic crisis has demonstrated anything, it’s that
systemic risk is no longer just a banking issuer responsibility. It’s
increasingly showing up in capital markets as well,” he said, citing the
example of asset-backed commercial paper, which dealers sold to
institutional and retail investors without properly articulating their
Hockin is also recommending an
independent tribunal to adjudicate enforcement cases. He said this would
remove the perception of bias that arises when provincial commissions
act as both regulators and adjudicators.
Under Hockin’s timeline, the new system
would be implemented in two stages over a three-year period.