Quebec has stepped up its fight against a national sec-urities regulator. It doesn’t have much of a case, but you have to admire the effort.

Last month, Quebec ramped up the battle, with speeches from the province’s finance minister, Raymond Bachand, and the head of Autorité des marchés financiers, Jean St-Gelais. The province also has formed a group of business and civic leaders that opposes the federal effort.

It’s also surprising that a handful of issuers have signed on to the cause, as they would presumably be among the primary beneficiaries of a more streamlined regulatory structure. Essentially, they argue that the creation of a single regulator would be bad for economic activity in Quebec; that losing regulatory authority would undermine its ability to attract financial services business to the province; and that it would lose high-value jobs as a result. They also see it as a power grab by Toronto, and worry about losing the derivatives industry in Montreal.

Inadvertently, the biggest proponents of a single regulator — Ottawa and Ontario — seem to be doing their best to help opponents make their case. Between Ontario’s politically tone-deaf demands that the new regulator’s head office be located in Toronto and spurious claims from federal politicians that every financial crisis, or scandal, is evidence of the need for a single regulator — they help undermine all of the genuine, sound reasons for its creation and spark fear that it won’t be done right.

While Quebec’s concerns are surely legitimate, it’s hard to see how this defeats the case for a single regulator. The existing system is unnecessarily fragmented and convoluted, making both day-to-day regulation unnecessarily cumbersome and policy development needlessly slow. The creation of a national regulator is also an opportunity to make some fundamental changes to the regulatory structure, such as separating adjudic-
ation and improving access to investor restitution, which are sorely needed. A single regulator done right could also effectively create policy for niche markets, such as derivatives and junior issuers. Sound policy isn’t determined by geography.

There’s no question that a single regulator makes sense. The question is whether those pushing it can get it right. For highlighting the danger of getting it wrong, the opponents in Quebec deserve a touch of admiration.