OTTAWA – Ottawa says it now has four provinces ready to sign on to create a national securities regulator, with the new office overseeing financial markets expected to be operational by the fall of 2015.
Representatives of Saskatchewan and New Brunswick were present for the announcement today, saying they are joining Ontario and British Columbia in an agreement for the formation of a national body to jointly police securities and capital markets.
The gang of four represent about 55 per cent of the value of capital markets, officials say.
This still leaves six provinces out of the scheme — with Alberta and Quebec the key hold-outs — but officials say they will continue trying to bring others into the national body.
The government says it plans to issue a initial draft regulations for public comment on the co-operative legislation involving the four provinces by Dec. 19 of this year.
The plan is to have the four provinces enact legislation affirming the deal by the end of next June and for the joint Capital Markets Regulator to be operational by the fall of 2015.
The federal government has characterized the agreement with the four as a significant step in the creation of a national securities regulator that would replace what it says is an inefficient patchwork of 13 different regulatory systems operated by each province and territory.
The announcement is expected to be hailed by financial and business groups, who have long called for a uniform body to oversee issuance of bonds, investment practices and stock markets.
In an interview prior to the announcement, Ian Russell of the Investment Industry Association of Canada said he would welcome the addition of two or more provinces and that once a regulator is operational, he expects others to come on board.
“Once it starts becoming operational, it will make all the difference in the world because those provinces that are on the fringe are going to have to make a decision,” he explained.
“You suddenly are introducing a uniform securities act with detailed regulations … that will encompass at least 50 or 60 per cent of the Canadian capital markets. It will only be a short matter of time before most of the other provinces will come in because there’s too many efficiencies to gain by coming in and too much efficiency lost by staying out.”
Although far from complete, this is as close as Ottawa has come to establishing a national regulator since the late finance minister Jim Flaherty took the issue on as almost a personal crusade shortly after taking office in 2006.
Flaherty and his successor Joe Oliver have maintained that the current system, with 13 regulators and commissions across the country, is Byzantine and inefficient,and despite co-operation through what is called a “passport system,” has made it difficult to police abuses and securities fraud.
But initially Ontario, home to Canada’s largest stock market, was the only province to agree with the initiative and several provinces threatened to take Ottawa to court if it proceeded.
In 2011, the Supreme Court sided with the provinces on the main question of jurisdiction, while leaving the door open to federal-provincial co-operation.
Last September, Ontario and British Columbia announced they had established a co-operative capital markets regulatory system and begun work with Ottawa to develop complementary provincial and federal legislation governing capital markets.
Russell said a national or common regulator would do more than oversee stock markets. The office would also police debt markets and oversee institutional traders, high-frequency traders, new bond and equity issues and disclosure relationships between investment advisers and their clients.
“And for the first time we will have a regulator that will represent Canada internationally,”