The B.C. Securities Commission has released a study looking at the expected regulatory impact of its proposed deregulation model.

The study, authored by the BCSC’s economist Christina Wolf, finds that the B.C. model would improve investor protection, without burdening the investment industry with extra costs..

According to the report, the B.C. Model would improve investor protection because its emphasis on outcomes would help keep the compliance focus aligned with the interests of investors and markets. “The firms in our study said they would use the Model’s procedural flexibility to re-allocate resources to more effective means of preventing and detecting misconduct. The outcomes mandated by the B.C. Model are broad enough that most new compliance and enforcement challenges can be dealt with faster than under the current legislation,” it says. As well, it notes that the simulations conducted by commission staff show that the B.C. Model provides a stronger foundation for effective compliance reviews and enforcement action.

Firms contacted by the study said that they would know how to apply the Code of Conduct and the other outcomes-based rules contained in the B.C. Model. “The B.C. Model allows firms to achieve all elements of investor protection in the way that is most efficient for their business,” the report says.

Finally, the report concludes that an analysis of the data provided by the participating firms indicates that implementing the B.C. Model would not increase ongoing compliance costs, nor would it entail significant transition costs. “The B.C. Model’s simpler rules and less frequent rule changes would reduce ongoing compliance costs. When firms are free to decide for themselves how to achieve desired regulatory outcomes, they can design policies that make best use of their structural advantages. We can expect them to do so more efficiently than a regulator that uses traditional rules and builds one solution for all players,” it says.

The report is the second in four studies to analyze the impact of the changes within the B.C. Model. The first study, a cost-benefit analysis of the Continuous Market Access System, was released last November. The third and fourth reports will look at the impact of the B.C. Model on firm-only registration and investor remedies proposals.