Canada’s proposed new securities regulator , due to be rolled out next year, is not ready for launch.
September 19, 2017 – Canada’s proposed new securities regulator , due to be rolled out next year, is not ready for launch, according to a leading financial expert. In Not Ready for Prime Time: Canada’s Proposed New Securities Regulator, published by the C.D. Howe Institute, author Harvey Naglie argues that, in its current form, the proposed regulator suffers from key flaws that need addressing.
The federal government, together with five provinces (Ontario, British Columbia, Saskatchewan, Prince Edward Island and New Brunswick) and one territory (Yukon) are currently developing and planning to launch, before the end of next year, a new securities regulator. According to the participating jurisdictions, this new regulator, the Capital Markets Regulatory Authority (CMRA), will streamline Canada’s capital markets regulatory framework to better protect investors, foster more efficient capital markets and manage systemic risk. As a result, the Canadian public expects that the CMRA, once launched, will feature many of the attributes and offer many of the benefits that have typically been associated with a single national regulator.
“Unfortunately, these expectations are destined to be disappointed, if not betrayed, because the CMRA in its current form is not, and will not be able to operate as, a single national regulator,” said Naglie, a former senior policy advisor with the Ontario Ministry of Finance.
While it is true that the original objective of this most recent securities regulatory reform initiative was the creation of a single national regulator, a combination of constitutional imperatives and political choices precluded that outcome, added the author. As a consequence, the CMRA is a significantly compromised Plan B that will lack the ability to unilaterally impose its regulatory authority across the country, a fundamental feature, if not prerequisite, of a single national regulator.
Furthermore, there is no assurance or even likelihood that the key provinces of Quebec and Alberta will join the new regulator following its launch. In its current form, it is not even obvious that the CMRA will constitute an improvement relative to Canada’s existing securities regulatory system. Canada’s provincial securities regulators have, in recent years, collaborated to create a relatively high degree of harmonization in securities regulation, which has fostered vibrant and resilient capital-market growth in Canada.
“There is a legitimate question as to whether the CMRA, in its current form, is ready for prime time,” said Naglie. With so much at stake, it is vital that the participating jurisdictions provide more and better information about what exactly the Canadian public will be getting and what exactly it will be sacrificing or putting at risk if the new regulator launches as planned. “The participating jurisdictions need to put the brakes on the current initiative and defer its launch pending an independent review and analysis of the CMRA,” said Naglie.
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The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
For more information contact Harvey Naglie or Jeremy Kronick, Senior Policy Analyst, C.D. Howe Institute. Phone: 416-865-1904 or email: AMcBrien@cdhowe.org