Fostering a culture of debate

It’s one that comes with some major challenges, given the awkward position that the CSA finds itself in these days. While its job is to co-ordinate regulatory policy among the various provincial securities commissions, it’s trying to carry out this work amid an ongoing effort by the federal government to create a new co-operative regulator among willing provinces.

So far, five provinces (British Columbia, Ontario, Saskatchewan, New Brunswick and Prince Edward Island) and one territory (the Yukon) have signed on to that project. Yet, the regulators in each of those provinces continue to belong to, and participate in, the work of the CSA.

Morisset concedes that the work taking place among the various governments to devise the new co-operative capital markets regulator (CCMR) creates a difficult environment for the CSA. If the CCMR goes ahead as currently envisioned, almost half of the CSA’s membership would be pulled into the new regulator. The issue is further complicated by the uncertainty over the CCMR’s future.

It’s against this background of fundamental uncertainty that Morisset is taking over at the CSA, which has its own crowded docket to deal with. This ranges from the possibility of introducing a fiduciary duty for those who provide retail investment advice and reforming capital markets structures, to introducing new oversight of derivatives markets.

“My job as CSA [chairman] is to continue to push [the regulatory agenda] and work collaboratively with my colleagues in this difficult context,” Morisset says. “My role is to focus the efforts of the Canadian regulators and to do our job. What’s above our head, at the political level, is there. But we need to do our job.”

The task of leading the CSA is just one more responsibility for Morisset, who is already juggling the duties of heading up the AMF – which, as an integrated regulator, has broader responsibilities than most other securities commissions – that sees him working an average of two days a week in Quebec City, while living in Montreal, and helping to raise a young family of three children, along with his wife.

Morisset has been head of the AMF for almost two years now. He was named to lead that regulator in July 2013, after spending seven years as the head of its securities division. Prior to that, he was in private practice for almost 10 years with Stikeman Elliott LLP. He also currently sits on the board of the International Organization of Securities Commissions (IOSCO), and is very much involved with some of its initiatives at the global level.

The CSA is an organization that Morisset strongly believes in, and passionately defends. It is often criticized as slow and inefficient due to the multiplicity of regulators, with differing priorities and interests, that are involved. But, he argues, this actually represents a strength of the Canadian system, as the policy debates this structure generates can result in better-crafted solutions.

Morisset points to the recent effort to produce reforms for the regulatory treatment of hostile takeover bids. This, he says, is an example that demonstrates that the diversity of opinion within the CSA fosters a debate that leads to a better outcome. In the spring of 2013, the CSA and the AMF simultaneously published their own consultation papers proposing two different sets of possible reforms.

Following parallel consultations, the CSA decided to proceed with a harmonized takeover bid regime that incorporates some of the more significant reforms that were initially proposed by the AMF. The proposed amendments are now out for comment until June 29.

This approach to policymaking may take longer than it would for a single regulator to decide on a direction and adopt reforms, but Morisset argues that the resulting reforms are better structured. National regulators, such as the U.S. Securities and Exchange Commission (SEC), may be able to go faster than the CSA, he says, but they often produce sub-optimal solutions. “Going fast is not always the key,” he says. “The takeover bid reforms took time, but we ended up with a good Canadian solution.”

Morisset sees that model as the right way to continue in Canada. “We are determined to work together, to collaborate, to harmonize as much as possible,” he says. “But we [also] have the ability to look at our own markets, focus on our own markets, and take the right decisions for our own markets – always with a view to coming up with a Canadian approach.”

A couple of the major areas in which Morisset expects the CSA to come up with a Canadian approach in the next year or so are the critical issues of fiduciary duty and mutual fund fee reform. Although the Ontario Securities Commission (OSC) has been leading the way on these initiatives, Morisset confirms that they are also top priorities for both the AMF and the CSA.

“We have to focus on the protection of investors; this is at the heart of what we do,” he says. While these projects have been in the works for several years – the CSA issued consultation papers on both issues in late 2012 – Morisset says, “It’s useful to take time, but we’ll need to deliver.”

Just where the CSA will land on these questions, he isn’t prepared to guess. “We need to focus on: what are the issues, and what is the best solution for addressing these issues. There is a spectrum of [possible] solutions and we need to end up on the right one,” he says. Although Morisset declines to speculate on the outcome, he notes that the CSA reviewed these projects at its most recent meeting. He expects that it will be in a position to reach a policy decision in these areas within its current business plan, which runs until 2016.

Morisset’s own posting as CSA chairman is for two years, until March 31, 2017. He also has a five-year mandate as head of the AMF, which will not expire until mid-2018. Where Morisset goes from there, he doesn’t know just yet.

At 42, he’s still a long way from retirement. Outside of work, the one thing the life-long hockey player does know is that he never intends to hang up the blades.

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