Joe Oliver, president and CEO of the Investment Dealers Association of Canada, argued yesterday for the IDA’s proposed merger with Market Regulation Services Inc., and structural reform among the securities commissions.

Speaking at the Canadian Club of Toronto, Oliver said that assuming that the boards and membership of the IDA and the Toronto Stock Exchange approve a merger, the two regulators will then request formal approval from the Canadian Securities Administrators.

“Our position is that a single member and market self-regulator will be a real achievement in the public interest,” he said. “It will strengthen self-regulation. It will allow us to take advantage of synergies, deal with regulatory gaps and overlaps, reduce investor confusion and bolster public confidence in the regulatory system.”

Oliver noted that further consolidation (with the Mutual Fund Dealers Association) is, “desirable and indeed inevitable, but for the moment our focus is completing the IDA/RS transaction. When the MFDA is ready, there will be an opportunity to complete the task of consolidating self-regulation in Canada.”

Oliver also discussed the prospects for reform at the provincial level, noting, “that the system permits incremental improvements, but discourages fundamental change. Nor is there yet the collective will among provincial governments to make it happen.”

“Canada’s regulatory system operates at a high standard, in spite of, not because of its structure, which is viewed with bemusement by other countries,” he noted. However, he added that “there is momentum for fundamental change, be it evolutionary or revolutionary and a growing acceptance that regional interests can be addressed in a Pan-Canadian organization.”

Ontario is pushing a single regulator model under provincial jurisdiction, and Oliver noted, it “has effectively conceded the head office, a limited role on a Ministerial Council and meaningful regional centers. There is very little more to give.”

“The virtue of patience can be overstated. If this proposal doesn’t fly, some might conclude that it’s time to make common cause with Ottawa and set in motion an opt-in model. That could quickly lead to a result that everyone will wonder why we didn’t achieve much earlier,” he said.

Oliver also noted that the IDA intends to request that its disciplinary panels provide restitution in appropriate cases. Such cases must meet five conditions: when there are funds available; the loss is clearly attributable to the misconduct; the individuals entitled to restitution can be clearly identified; the amount can be readily ascertained; and, the funds can be easily and efficiently distributed.

“These circumstances will not match many of the cases that come forward. But they are fair, clear, reasonable principles that can be implemented and that investors can respect,” he said.

“Restitution is not a panacea. It can only be triggered when a regulatory infraction has been proven, which requires a higher burden of proof than a civil action,” Oliver noted. “Also, regulatory proceedings frequently extend beyond the limitation of actions, which means if restitution were not granted, that would be the end of the road.”