The Wise Persons’ Committee to Review the Structure of Securities Regulation in Canada is calling for the creation of a single regulator built on a joint federal-provincial model.
Under the recommended model, the Canadian Securities Commission would consist of nine full-time, regionally representative commissioners appointed by the federal Minister of Finance.
Nominees would be proposed by a 13-person nominating committee with 10 members designated by the provinces. A Securities Policy Ministerial Committee consisting of the provincial ministers responsible for securities regulation and the Minister of Finance would provide a framework for provincial input to securities policy and the system’s administration.
The CSC would administer a comprehensive code of capital markets regulation to be enacted by the federal government. The WPC says this legislation should take into account the Uniform Securities Legislation Project that has been undertaken by the Canadian Securities Administrators and other provincial legislative reform proposals.
The WPC says that its single regulator proposal would significantly strengthen enforcement, facilitate better policy innovation and development, and enhance Canada’s brand of securities regulation internationally. “Moreover, it would establish clear lines of accountability, ensure responsiveness to regional needs, provide for uniform investor protection across Canada and facilitate the reallocation of substantial funds towards better enforcement and other pressing regulatory issues.”
The committee’s report, titled It’s Time, is a response to a high level of frustration among market participants with the inadequate enforcement, undue complexity, excessive cost and weak international profile of Canada’s current regulatory system of 13 provincial and territorial regulators. “There was a time when Canada was well served by a provincially-based system of securities regulation, but those days are gone,” said Michael Phelps, committee chairman. “It’s time for Canada to have a single regulator administering a single code nationwide.”
Phelps added that Canada can no longer afford to be the world’s only major industrialized country without a national regulator.
Phelps said the WPC gave “serious consideration” to the proposed passport model of regulation proposed by the B.C. Securities Commission, but rejected the proposal. “The passport represents an incremental improvement over the status quo, but as a number of market participants pointed out, it falls far short of the kind of system Canada needs to be successful,” Phelps said.
He added that the WPC is urging the federal and provincial governments to work together to promptly implement the committee’s recommended model. “This must not be about federal-provincial turf squabbles. It has to be about serving the best interests of Canada’s capital markets and the Canadian economy,” he said.
The WPC was established by former Minister of Finance John Manley in March 2003. Its mandate was to undertake an independent objective review of the current securities regulatory framework and identify an appropriate model for securities regulation in Canada.
The committee members are:
- Michael Phelps (chairman), chairman, Dornoch Capital Inc., and former chairman and CEO, Westcoast Energy Inc.;
- Harold MacKay (vice-chairman), senior partner in the Saskatchewan-based law firm of MacPherson Leslie & Tyerman LLP;
- Tom Allen, senior partner, Ogilvy Renault;
- Pierre Brunet, chairman of the Canadian Institute of Chartered Accountants;
- Wendy Dobson, professor at the Rotman School of Management;
- Edwin Harris, counsel with the Halifax office of the law firm Patterson Palmer; and
- Michael Tims, chairman, Peters & Co. Ltd.