In a submission to the federally-appointed Wise Persons’ Committee on Securities Regulation, the Ontario Securities Commission presents its case for a national regulator.

In a letter addressed to the committee chair Michael Phelps, OSC chairman David Brown cites the need for regulatory efficiency, the fact that Canada’s regulatory structure is at a competitive disadvantage, and the need for consistency for market players and international players, as reasons for a national regulator.

“We are convinced the market is no longer prepared to bear the cost of a fractured system, and we recognize that a single regulator would lead to better coordination, significant economies, and greater creativity in the regulatory process,” Brown writes.

In the letter, Brown concedes that the mutual reliance system has done little to alleviate inefficiencies in the current system. He says that the Canadian Securities Administrators’ efforts to create a uniform law will not go far enough in reforming the system. And, he says that the so-called “regional issues” that argue against a national system, are overblown.

“The truth is, fragmentation is a self-fulfilling cycle. The existence of separate markets with unique characteristics is seen to justify a fractured regulatory system, which fosters fragmentation,” Brown writes. “The markets are more and more global and our own regulatory issues are increasingly North American, let alone national. In this context, achieving the best regulatory structure for Canada should not be impeded by outdated notions of regional markets and interests.”

Recognizing the political problems of creating a federal regulator, Brown writes that it may be more politically feasible to create a pan-Canadian Commission, “one that is created by the provinces and territories with the support, cooperation and some involvement of the federal government. A Pan-Canadian commission would provide the national focus, coordination and harmonization that is needed — without disturbing the existing constitutional distribution of powers or aggravating regional concerns that have frustrated progress in this area in the past.”

He imagines that provinces participating in the pan-Canadian Commission would delegate to it responsibility for administering securities laws. “With substantially harmonized or uniform securities laws, the new agency would result in one regulator administering a single set of securities laws. Regional offices would improve the Commission’s national effectiveness and draw upon existing provincial expertise, such as oil and gas in Alberta and derivatives in Quebec,” he writes.

Still, Brown writes that a national commission is the ideal solution. “Although we believe that a Pan-Canadian Commission may be more politically feasible, we concur with the Five Year Review Committee’s recommendation that the principal goal is a single national securities regulator.”