Canada’s securities regulators performed admirably during the Covid-19 crisis.
Both the Canadian Securities Administrators (CSA) and the investment industry’s self-regulatory organizations distinguished themselves by providing firms with the flexibility to traverse unprecedented conditions.
The industry, so far, has weathered the crisis well. If firms hadn’t been pushed to create business continuity plans, or if regulators had insisted on adhering to pre-crisis requirements, the results could have been very different — particularly for small firms, which typically have less capacity to absorb disruption.
With plaudits come higher expectations. The fact that regulators have demonstrated their ability to move quickly and decisively raises the bar for their future performance.
Ordinarily, investor protection initiatives can take years, if not decades, to come to fruition. Regulators too often entertain endless debate, are too credulous of lazy industry objections and too willing to let known issues fester, ignoring the harm inflicted through inertia.
The nimble response of regulators and the industry to the pandemic shows that both are capable of more than we previously throught. Hopefully this won’t be forgotten once the pandemic subsides.
Ideally, this unwelcome period will serve as a catalyst to innovation, allowing regulators to shed their fears of change. Regulators usually seem to know the right thing to do when it comes to investor protection, but are too timid to act.
Ultimately, the industry will adapt to whatever comes its way, as it always has. This episode demonstrates how quickly and dramatically things can shift when required.
Regulators can’t function in emergency-response mode all the time. But nor should they return to their previous state of progress at a glacial pace.
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