One of the central arguments for decentralized securities regulation is the need for local regulators to deal with local issues. A paper prepared for the Wise Persons’ Committee by law professor Poonam Puri concludes that this is not an issue.

In her report — which was released with the WPC’s report today — Puri focused on so-called local infrastructures for capital raising, which are often cited as an example of the effectiveness of local regulation. She found, “Overall, the analysis in this study finds that most local regulatory responsiveness is not the product of local and regional distinctiveness. As a result, the main conclusion to be drawn from the study is that existing local and regional differences can be accommodated under different regulatory models without appreciable differences in regulatory outcomes.”

However, Puri cautioned, “This does not amount to an assertion that, in considering alternatives to the current regulatory structure, local regulatory expertise should not be preserved. A uniform securities law model and a passport model would allow for existing regulatory expertise to be maintained within existing local regulatory commissions. A single regulator (whether a model based on provincial delegation or federal action) could, if properly designed (for example, along industry lines and/or with regional offices) maintain existing expertise.”

She also noted that to the extent that a local infrastructures for capital raising does not exist for certain industries and as a result, no one local regulator currently has expertise, a single regulator would allow for a consolidation of scattered expertise.

Puri is an Associate Professor of Law at Osgoode Hall Law School, York University. Her area of expertise includes securities law and corporate governance.