“Canada is too small a market not to think globally,” securities lawyer and former chairman of the Ontario Securities Commission Edward Waitzer told the Investment Industry Association of Canada annual conference today in Banff.

Waitzer, a partner at Stikeman Elliot in Toronto, says Canadian securities regulators have to address their changing place in the world market, figure out how to protect investors, and perfect accountability mechanisms before they will be in a position to address effectively hot button issues such as registration reform and multi jurisdictional mutual recognition.

“In the United States, change is motivated by their desire to maintain their competitiveness,” explained Waitzer, “and Canada is falling farther and farther behind.”

The bureaucratization of the regulators, regulatory fatigue and a lack of political currency have each played their part in slowing the regulatory response times, he says. Reform can take years.

And the market is not waiting for Canadian regulators to catch up. As products are becoming more sophisticated and derivative and long/short strategies more commonplace, shareholders are not necessarily betting on an uptick in efficiency. The search for market efficiency has created an environment, says Waitzer, in which there is “a separation of ownership from responsibility.” Increasingly synthetic products undermine the balance between risk and return upon which market principles were built.

There are a few “glimmers of hope” on Waitzer’s horizon. While it took two years, the Investment Dealers Association of Canada and Market Regulation Services Inc. did merge, creating the Investment Industry Regulatory Organization of Canada. Also, Federal Finance Minister Jim Flaherty continues to show a level commitment to building a better regulatory structure in Canada.

Ultimately, says Waitzer, “putting good ideas in front of politicians is the role of the IIAC.”