The structure of Canadian securities regulation may be a well-documented mess, but the Investment Dealers Association of Canada is striking a task force to undertake a comprehensive study of what it suspects may be a bigger problem — its content.
President and CEO Joe Oliver will introduce the task force at the IDA’s annual conference in Banff today. The eight-member task force will be charged with developing a blueprint for modernizing securities regulation in Canada thus ensuring its integrity and competitiveness for the 21st century.
Oliver notes that recent reform efforts — the wise person’s committee, Ontario’s five-year review, the Uniform Securities Law project and Ontario’s new committee charged with defining a model for a single regulator — all focus on structure. But, he says, “Content is more important.”
The so-called “blue ribbon” task force is expected to undertake research in five major areas:
- individual investor protection;
- the costs and effectiveness of governance;
- access to capital;
- the regulatory burden; and
- enforcement.
The investor protection effort will focus on areas such as effective disclosure, technology, sophisticated investor rules, whether new account opening documents are needed, whether fee disclosure should be enhanced and if investment performance reporting should be improved. It will also scrutinize prospectus requirements, attempt to divine the system’s proper place on the continuum between rules-based and principles-based regulation and study the effectiveness of enforcement. It will not consider questions of jurisdiction.
“I think there’s always scope for looking at these issues with fresh eyes,” says David Brown, outgoing chairman of the Ontario Securities Commission, although he cautions that fatigue may be setting in with all the task forces and committees that have consulted and studied securities regulation recently.
The B.C. Securities Commission has studied similar issues recently, although it has yet to proclaim its new legislation, or receive much buy-in from other regulators. The OSC’s fair-dealing model initiative went through extensive consultations on issues dealing with individual investors as well as fees and the quality of disclosure. Brown suggests that the success of this initiative will depend on finding new issues to study. If it does that, he says, “It could be quite useful.”
The task force is expected to begin work this fall, with an eye to reporting by the fall of 2006. Oliver says that the group can be expected to conduct original research, collect data, theorize and hold cross-Canada hearings into the various subjects. It will undertake a broad consultation, independent of the IDA and will primarily focus on securities legislation, rather than the rules of the self-regulatory organizations themselves.
The initiative is to be funded to the tune of $7 million, part of the $42 million bounty that the IDA collected in its market-timing settlement. This project represents the first allocation of funds for public interest purposes.
Tom Allen, senior partner at Ogilvy Renault, is chairing the task force, which also includes Jill Denham, former vice chair of retail markets at CIBC; Colleen Moorehead, former CEO of E*Trade Canada Securities; Jacques Menard, chairman of BMO Nesbitt Burns Inc.; Don Black, president and CEO of Greystone Capital Management Inc.; Columbia University securities law professor John Coffee; Robert Pritchard, president and CEO of Taylor NGL LP; Thomas Kierans, former president of the CD Howe Institute; and Michael Wilson, chairman and CEO of UBS Asset Management and federal finance minister from 1990-1994.