It will be up to investors, brokerage houses and issuers to champion the Canadian Securities Commission model proposed today by the Wise Persons’ Committee says WPS chairman Michael Phelps.

Speaking at a news conference in Vancouver, Phelps joked that if it was up to the capital markets, Canada’s regulatory system would be fixed by noon today. “Politicians respond to pressure,” he says, adding that it is up to capital markets players to keep the pressure on. More realistically, he suggests that the project could be completed in a year, but that governments would need to go at their own pace, and that the expected spring election would slow it down.

Phelps indicated that the committee has talked with the new federal Finance minister, Ralph Goodale, and understands that this issue is a priority for the minister.

Phelps demurred when it was suggested that he may run for the Liberal party in the next election, and could become the advocate for this issue, saying he would “not comment on rumour, or speculation”.

Notwithstanding the lack of a champion for this issue, Phelps says that the WPC quickly came to the conclusion that the current regulatory system needs to be rationalized. He highlighted the importance of the three legal opinions, which suggests that a national regulator is constitutionally viable, and the depth of the economic research it has commissioned on the issue. “There’s no long-term sustainability to our current model of regulation, in our view,” Phelps says. “We don’t get very far if this is an exercise in constitutional law, or something that touches on turf protection. It has to be about what’s best for the capital markets for Canada.”

Phelps insists that the economic reality of the capital markets makes securities regulation a matter for federal jurisdiction, and that the provinces should not be able to object on those grounds.

As for potential cost savings, Phelps indicated that the expected outlay costs for regulation would fall by about $50 million, and added that the committee didn’t think this would be enough to justify creating a national regulator. However, he noted this doesn’t account for the opportunity cost lost to the current system, and the administrative burden created by the fragmented system. Much more speculatively, the savings including these factors has been estimated at $1 billion — a sum that the WPC does expect to justify a new system.

Phelps says that much of the out-of-pocket cost savings should be allocated to greater enforcement activities. He noted that the SEC in the U.S. dedicates about 29% of its budget to enforcement, compared with 13% to 19% among Canadian authorities.

Apart from simple cost savings, Phelps says that a national regulator is very important in terms of dealing with regulators and market players in other jurisdictions. “The world simply wants to deal with one voice,” he says.

He noted the recent International Monetary Fund report that highlighted the importance of getting a national regulator for Canada. Phelps says there is simply no justification for Canada remaining the only developed country in the world without a national regulator.