As the new chairman of the Canadian Securities Administrators, Bill Rice has the unenviable job of running an organization that’s increasingly driven from within and rejected from without.

Rice, who became chairman and CEO of the Alberta Securities Commission in 2005 and was reappointed for another five-year term in late 2009, takes over the helm of the CSA at a time at which the long-running effort to create a national securities regulator has come further than ever. If that effort is successful, the new regulator would usurp the CSA’s role.

Indeed, the case for a national regulator is premised, in part, on the idea that the CSA is inadequate. The driving force behind this effort to create a national regulator, federal Finance Minister Jim Flaherty, said as much in a speech to the Calgary Chamber of Commerce last year: “The securities regulatory system as it stands now… places needless burdens, not found in other markets, on the shoulders of Canadian businesses.”

There have been many efforts to improve the CSA’s operations in response to this sort of criticism. Many provincial rules have been harmonized and regulatory approvals streamlined with the introduction of the passport system. Even so, Flaherty maintains, the passport system is not good enough, noting that individual provinces can still disrupt policy-making efforts. And he insists a national regulator would also improve accountability and enforcement.

Rice has long held that he doesn’t buy many of the oft-repeated arguments in favour of a national regulator. And, not surprising, taking over as head of the CSA — for which he has been appointed to a two-year term (ending March 31, 2013), succeeding Jean St-Gelais, former president and CEO of the Autorité des marchés financiers — hasn’t changed Rice’s position.

“I feel that the CSA is quite an achievement, and would be disappointed to see it taken down,” Rice says. “The CSA is an ideal solution to the challenges [facing] Canada. That’s not to say that it doesn’t need continuing improvement and ongoing serious efforts to make it better. But from a structural standpoint, I can’t contemplate anything as good. So, it’s hard to get behind an alternative when you think that what we’ve gotten to at this point is pretty much as good as it gets for a country like Canada.”

The national regulator is not yet a reality — it still faces constitutional challenges in the Supreme Court of Canada, along with challenges in Alberta and Quebec courts; and, if the proposal gets over those hurdles, there is still uncertainty over just how many provinces will join. But the ongoing effort to create a national regulator is already sparking tension within the CSA.

As an umbrella organization with no formal authority, the CSA relies on a sense of co-operation among the various provincial securities commissions to get things done. That’s never easy because the individual regulators answer to political masters who may have divergent agendas.

Nevertheless, Rice says, he was “pleasantly surprised” when he first took over as head of the ASC at how well the jurisdictions got along — and how helpful they were to him as the new guy. “That sense of co-operation grew during my first few years,” he says, “and I have to say that I’ve observed some strains in those relationships in the past couple of years.”

Rice attributes the growing strains to Ontario’s resistance to join the passport system and its strong support for the creation of a national regulator, coupled with the federal government’s initiative to do just that.@page_break@Fundamentally, these efforts all serve to undermine the idea of the CSA. “If you’re going to work within an organization,” Rice says, “you’d like [to have] the sense that all the members of that organization were totally aligned.” Instead, there’s “an impact on a sense of goodwill.”

The increased strain among the members of the CSA is being felt at all levels: among the securities commissions’ top executives and throughout their staffs. Yet, the day-to-day work of the regulators is still being carried out. “Things are getting done,” Rice explains. “The system still works, but it’s in a somewhat more challenging atmosphere.”

As the new chairman of the CSA, Rice ideally would be able to reverse some of the decline in friendly relations. However, given that an effort to create a national regulator is at the heart of the issue, he concedes that there’s not much he can do. Still, he can try to alleviate some of the symptoms.

“There is a lot we can do as individuals to make the system effective, to try to communicate openly, so that there is less strain on internal relationships,” he says, adding that he believes the chairman of the CSA has a responsibility to try to make that happen. That’s not going to be easy, however, when some CSA members may be looking ahead to life under a national regulator.

Imagining how regulation will differ, depending on whether the CSA survives or a national authority comes to fruition, is impossible at this point. Then, there is the uncertainty over which provinces will participate in the new entity. Given that the feds’ strategy imagines voluntary participation, it’s safe to assume that some provinces will opt out — at least, initially — which would probably create a need for CSA-like co-ordination among the remaining provincial regulators and the new federal body.

“As securities regulators, we all would have an expectation that for the benefit of the market, there’s as much harmonization as possible and there’s as much communication and co-ordination as possible,” Rice says. And, absent a national regulator, he suggests, the CSA could be used to address some of the reasons underlying its creation. “We hear concerns that Canada does not speak with one voice on the international stage, and that would be a matter quite easily addressed through the CSA.”

Rice adds that the perception of a lack of a single voice could be solved by designating someone within the CSA to speak on its behalf: “I don’t have to wear a label that says, ‘Alberta,’ I’m quite happy to wear a label that says, ‘CSA’.”

Indeed, Alberta is just part of Rice’s identity. He was born in Nova Scotia, raised in Montreal and went to law school in Toronto before launching his 30-year law career in Alberta. He was managing partner at Bennett Jones LLP in Calgary when he was tapped to take over at the ASC. Outside the office, his interests range from typical (golf) and conventional (skiing and cycling) to the unexpected (performance driving).

Rice says that he doesn’t have an agenda to try to change the CSA’s structure or basic processes. He says that the CSA’s priorities remain the issues that came out of the financial crisis: the regulation of over-the-counter derivatives, securitized products and the role of credit-rating agencies. The CSA also must be mindful of, and prepared to adapt to, the significant regulatory reforms taking place in the rest of the world. IE