Securities Regulation in Canada at a Crossroads

On May 26, 2010, Canada’s Minister of Finance tabled in the House of Commons a draft Securities Act. The purpose of the Act is to establish Federal government jurisdiction over securities legislation and create a Federal Securities Regulatory Authority. With this initiative, the Federal government proposes to centralize the regulatory apparatus to ensure uniformity of policies and regulations across Canada and meet international standards of quality and comprehensiveness. But this initiative also raises significant constitutional and economic policy issues. In a comprehensive paper examining the main arguments supporting a centralized securities apparatus, Pierre Lortie, Senior Business Advisor at Fraser Milner Casgrain LLP, argues that sound public policy should move ahead only if there is a strong body of empirical evidence demonstrating that the performance of the current regime is significantly inferior to that of other countries — particularly the United States — and that a centralization of the regulatory apparatus is necessary to correct the situation. The paper demonstrates that Canada’s decentralized securities regulatory regime has in fact shown flexibility, a great capacity to adapt to changing circumstances and an unrelenting ability to respond to particular industry or regional needs. It has also provided strong assurances against the hasty adoption of disruptive and costly regulations because it is less susceptible to the imposition of politically expedient or faddish requirements or the influence of a dominant industry or interest groups. In contrast, a centralized system runs the risk of turning into a disruptive, costly and regrettable initiative that will not give Canadians what they expect, while erasing many of the benefits achieved so far.