A report prepared for the Wise Persons’ Committee finds that regulatory costs would be reduced by implementing a single regulator. However, alternative models would also provide cost savings compared with the current system.

The paper — which was released today — was prepared by Anita Anand, an Associate Professor at the Faculty of Law, Queen’s University, and Peter Klein, Associate Professor of Finance in the Faculty of Business Administration at Simon Fraser University.

The authors considered whether “material incremental costs” incurred under the current system would be reduced under the proposed passport system, uniform securities legislation, or a single national securities regulator.

They concluded that any of the three alternative regulatory models will reduce or eliminate material incremental costs and opportunity cost risk. But it doesn’t find that one system would be better than any other. “To varying degrees, there is uncertainty about the precise operation of each alternative regulatory model under the four areas of securities regulation that we examined. Therefore, on the basis of our cost analysis, we cannot conclude that one of the alternative regulatory models reduces incremental costs more than any other,” Anand and Klein wrote.

The study found that, neither issuers, nor registrants, are over-staffed to a significant degree due to the existence of a multiplicity of securities regulators.

However, Anand and Klein noted a deep level of frustration with the current regime. “The feedback we received indicated that market participants strongly believe that the duplication and lack of harmonization inherent in the current regulatory regime are onerous and do not strike an appropriate balance between stakeholder protection and commercial needs. Market participants further represented that the high level of regulatory uncertainty regarding the securities regulatory regime detracts from their ability to manage their businesses.”

The study’s results are based on interviews with, and written responses received from, market participants who agreed to take part in this study on a confidential basis.