There’s no question that winning the buy-in of Saskatchewan and New Brunswick represents – symbolically, at least – progress toward national securities regulation. But, unless the provinces also are prepared to start ceding ideological ground, it may prove to be a hollow victory.<\/p>\n
Proponents of the plan for a co-operative capital-markets regulator (CCMR) are touting the news that these two provinces have signed on to the existing agreement among Ontario, British Columbia and the federal government as evidence that national regulation is now just a question of time.<\/p>\n
But the idea that this development creates inexorable momentum toward national regulation is more wishful thinking than it is reality. The fact is these two newcomers represent a tiny slice of the Canadian capital markets (3% or 4% combined). And the provinces that really matter to the effort toward creating a truly national regulator – Alberta, which represents about 26% of the market, and Quebec, at 14% – remain resolutely opposed.<\/p>\n
Moreover, the co-operation of these small players came with a price: further devolution of power within the proposed organization. To get Saskatchewan and New Brunswick on board, the feds agreed to create two new deputy regulator positions to ensure stronger regional representation in the new authority’s policy-making efforts. And those posts have been given to the new participants – for the first five years, at least.<\/p>\n
Now, unless the feds are prepared to create a deputy regulator position for every province that agrees to join, other provinces probably will come in with lower status in the CCMR, making membership a harder sell. The agreement already contemplates deputy regulator positions for Alberta and Quebec, if they can ever be persuaded to get on board.<\/p>\n
The real problem is that this strategy appears to entrench the primary failing of the current system, which is the lack of a consistent regulatory vision from province to province. Given that the existing regulators will be preserved for the most part within the CCMR, the new regulator, if it comes into being, may turn out to be co-operative in name only.<\/p>\n
And there’s no benefit to Canada’s capital markets in that.<\/p>\n
\u00a9 2014 Investment Executive. All rights reserved.<\/p>\n","protected":false},"excerpt":{"rendered":"
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