Metro Convention Centre
Tuesday, Dec. 13, 2005
Thank you for that kind introduction.
Good afternoon, ladies and gentlemen.
I'm pleased to be here today.
I don't think I can overstate the importance of vibrant capital markets
- not just for Ontario - but for the entire country.
Well-regulated capital markets underpin economic growth. They must be
attractive both to companies seeking to raise capital and to the
domestic and international investors that provide the capital.
That means providing high standards of protection to investors without
imposing undue burdens on businesses.
Just about everyone in Canada has a real interest in the success of our
capital markets. Through the Canada Pension Plan, RRSPs, pensions plans
and personal investments, every person in this country has a stake in
We in the Ontario government are working with our colleagues across
Canada to ensure that our capital markets continue to be attractive to
investors and businesses; that investors are well protected and that
Ontario and Canada remain great places to invest and to raise capital.
As Rod mentioned, I will be talking about the Crawford Panel's Report -
which we are hopeful will serve as a roadmap for discussions on moving
to a common securities regulator for Canada.
I'm also going to talk about what we're doing to modernize business and
securities law to enhance Ontario's competitiveness as well as actions
we've taken to enhance investor protection.
As you know, the Securities Act provides for regular legislative review.
A committee chaired by Mr. Purdy Crawford conducted the initial
That review report was tabled and referred to the legislature's Finance
Committee, which held hearings in August of last year.
Based on its findings, the committee issued a unanimous all-party report
with 14 recommendations to the government.
In many ways, Purdy Crawford and his committee's five-year review has
provided a good deal of guidance for the activity undertaken by the
ministry over the last year.
As you can see, we have kept Purdy busy. Very busy indeed. And Purdy, I
thank you for that.
We have proposed a number of changes that respond directly to many of
the Standing Committee's recommendations through the Budget Measures
The Act was introduced last month and is scheduled for Third Reading
today, I believe.
Among other things the Act proposes a new mechanism to strengthen the
Legislature's oversight of the Ontario Securities Commission by having
its annual reports referred to a legislative committee.
Other amendments to the Act will, if passed:
In last year's budget bill we amended the
Securities Act so that the next review committee will begin its work in
May 2007 and subsequent reviews will take place every four years.
We've also made changes to the Commodity Futures Act and have struck a
panel tasked with reviewing this Act as well.
This panel is chaired by Carol Pennycook. I understand they are making
good progress on their important work and I look forward to their
Ontario's commodity futures market has evolved dramatically due to the
introduction of new products and innovations in technology. The
derivatives area is one of the most rapidly expanding components of
Another committee recommendation called for the government to introduce
updated securities transfer legislation.
A couple of weeks ago, thanks to the hard work of the ministry and many
stakeholders, I introduced a bill to modernize securities transfer
The Securities Transfer Act represents the first of three phases in the
modernization of Ontario's commercial and corporate laws.
Phase 2 is under way and will focus on making changes to the Business
Corporations Act and the Personal Property Security Act.
Phase 3 will modernize the laws and reduce the cumbersome regulatory
burdens on charities and not-for-profit corporations.
These changes are needed because Ontario business laws have fallen
behind other jurisdictions' laws in responding to rapidly changing
The Securities Transfer Act, if passed by the Legislature, will update
Ontario's laws to reflect the way modern markets work by recognizing
that securities can be held in electronic form, not just through paper
This will bring Ontario up to date with the current business realities
of today's securities markets and ensure that our markets are in a
stronger position to compete with markets in New York, London and around
Industry sources tell us the savings could be more than $100 million.
Ontario officials have been working closely with their counterparts in
other provinces. Other jurisdictions are studying the legislation as
they move to develop and introduce similar laws of their own.
As you know we recently introduced Civil Liability provisions which make
Ontario the first Canadian jurisdiction to give secondary market
investors a statutory right to sue public companies for misleading
disclosure or failure to make timely disclosure.
These provisions give average investors the legal tools to protect
themselves against misrepresentations while at the same time providing
safeguards against frivolous lawsuits.
My understanding is that a number of other provinces are planning to
Working together across the country is critical if we are to make
headway on significant improvements to our securities regulatory system
- which leads to my next subject.
As you know, earlier this year, I asked a panel of respected
individuals, once again headed by Purdy Crawford, to come up with a
detailed proposal on the design of a common securities regulator.
Specifically, we sought advice on the legal and administrative elements
of a model that would be workable and would address concerns raised by
The panel included Claude Lamoureux, President and CEO of the Ontario
Teacher's Pension Plan Board, John MacNaughton, now a corporate director
and former President and CEO of the Canada Pension Plan Investment
Board; Brian A. Canfield, Chair, TELUS Corporation; Jacques Ménard Q.C.,
Chairman, BMO Nesbitt Burns and President BMO Financial Group, Quebec;
Gwyn Morgan, President and CEO, EnCana Corporation as well as John
Watson, EnCana's EVP and CFO who also made a significant contribution
and Dawn Russell, Associate Professor, and former Dean, Dalhousie Law
The contributions of panel members from across the country who brought a
broad mix of perspectives added different dimensions to this report and
significantly improved the final result.
The work the panel has produced - "A Blueprint for a New Model" -
contains innovative ideas that will require a thorough review by each
and every province and territory.
The report proposes that:
One participating province pass a new
single Securities Act. Other participating jurisdictions would
repeal their existing acts and incorporate the new single securities
act by reference.
The new regulator would administer the
single Securities Act.
A "Council of Ministers" would select
board members and adjudicators from names put forward by an
independent nominating committee, review new rules, and approve
changes to the Memorandum of Understanding that sets out various
structural matters relating to the single regulator.
A Board of Directors would:
Chief Commissioner who would act as CEO
rule proposals developed by staff of the Commission
Commission's annual budget, and Report to the Council of
Ministers on the operation of the Commission.
Commissioner would be the only executive on the Board and the
Board would have a non-executive Chair.
The report calls for the one
jurisdiction-one vote concept which ensures any participating
jurisdiction can be overruled, but also removes any fear that one
province would dominate. In practise, I would expect consensus
decisions on most of these issues.
The panel has identified what they see as
legitimate concerns of other jurisdictions that need to be addressed and
they have given us some bold recommendations on how to address them.
It is important that Ontario listen - that the Ontario government and
the Ontario business community listen - to what the panel has said.
During the panel's consultation phase it is going to be important for
all of you to participate.
Contribute your ideas. Contribute your thoughts.
I look forward to discussing the model with Canada's other responsible
ministers over the coming weeks.
I am keenly interested in their views and in the views of interested
The panel's discussion paper is a basis for productive discussion.
We are committed to working cooperatively with other jurisdictions to
ensure the utmost efficiency in Canada's securities regulatory system
and capital markets.
You may have read, either in the media or in the report itself, that the
panel does not recommend a particular location for a head office.
I've been asked if Ontario could really go along with a model for a
common regulator if it means a head office location outside Ontario.
Or, if Ontario could really accept a model for a common regulator if it
means one jurisdiction-one vote, a partnership among equals without
weighting for market share or capitalization.
My response is quite simple. Ontario has three requirements, and three
requirements only: that there be an effective common securities
regulator, a common body of securities law and a single fee structure.
At the end of the day that provides a lot of flexibility to set up a new
framework in a way that will make sense to us, and in a way that will
make sense to other governments.
Wherever the head office is located, the new common regulator will need
to be staffed to provide excellent regulatory service to all Canadian
market participants regardless of their size, industry sector or
We are flexible on specifics regarding all matters that could contribute
to a model for a common securities regulator that best serves the needs
of investors and businesses, no matter where they are located in Canada.
In the meantime Ontario will continue to work with the other
jurisdictions on harmonized rules and reform projects.
Ontario government officials continue to participate in the
Provincial/Territorial Securities Task Force even though Ontario did not
sign the passport MOU.
And the OSC will continue to play a leadership role in the Canadian
Securities Administrators' group and the important work of harmonizing
securities law across the country.
Before closing, I'd like to welcome Mr. David Wilson, the new Chair of
the Ontario Securities Commission, who is with us today. David's term
began this past November 1.
We are looking forward to David's contribution to ensuring Ontario's
capital markets are strong and healthy and have the confidence of
investors and publicly-traded companies alike.
Mr. Wilson's predecessor, David Brown, left an excellent legacy upon
which he can build.
To find his successor I received advice from a committee of very
accomplished individuals. Mr. Wilson emerged from that process as the
strong first choice for the position.
David is an outstanding individual and we are pleased that he has agreed
to lend his talent and expertise to this important role.
Thank you David.
In closing, I'd like to say once again that this government is committed
to ensuring that our capital markets continue to thrive - and that
investors are protected.
We appreciate all your contributions to date and look forward to your
continuing participation in helping us ensure that Canada - and Ontario
- remain great places to invest.