The federal government is proposing new legislation to create a national securities regulator. This initiative, although well intended, is an unnecessary bureaucratic intrusion into a constitutionally protected responsibility of the provinces. If implemented it will result in a massive waste of taxpayer dollars, increased regulation and associated business costs, and will likely achieve absolutely nothing in the way of increased capital investment for our nation.
Some commentators have opined that Canada is a world laggard with regards to security regulation, claiming we have a patchwork of securities regulators across the country that scares away capital investment. This charge is without merit. The current ‘passport system’ has made raising capital across multiple provinces very manageable.
There are indeed some differences between the provinces securities regulations, but these differences create competition and increased choices that businesses and investors greatly benefit from. For example, Alberta’s securities regulator, with the support of other provincial regulators, has consistently rejected Ontario’s calls for costly additional regulations akin to those found in the United Stated. This has saved Alberta companies billions in regulatory costs without compromising investor protection one iota.
Some have claimed that regulatory enforcement would improve under a national regulator. It is very difficult to imagine how another layer of bureaucracy located thousands of kilometres from our province would somehow be more effective than our locally focused and controlled Alberta Securities Commission. Somehow a new bureaucracy in Ontario regulating Alberta’s interests doesn’t fill my heart with warm embers of confidence.
In addition, Alberta’s securities regulations make it easier for small businesses to raise capital while allowing investors, who might not financially qualify in other jurisdictions such as Ontario, to invest in companies founded by family, friends and close business associates whom they know and trust. Much of these benefits could be lost to a one-size-fits-all securities regulator dominated by Toronto-based interests.
As we look around the world and compare how our own market has weathered the recent recession compared with others of the G8, I would ask why would we want to copy everyone else’s failed model? It is very possible that the massive bureaucratic centralization of national securities regulators around the world has made them too slow and cumbersome to address problems and abuses in a timely fashion – thereby contributing to the recent world market meltdown.
Furthermore, is Canada really considered a world securities pariah? Hardly! In 2006, the Organization for Economic Co-operation and Development (the OECD) ranked Canada's securities market regulation second among 29 countries. In 2007, the World Bank Group placed Canada fifth among 175 countries for protecting investors and fourth for ease of doing business.
The federal Finance Minister has recently been promoting Canada to world political and business leaders as a model example of sound financial governance. Perhaps he should listen to his own advice.
