| Over-Due |
22 December 2003
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Canadian Securities Commission May Be Established
It is hard to believe, but Canada is considering a national regulatory body to cover the securities industry. While the rest of the world has handled these issues at the national level since shortly after the Flood, Canada has made due with a more decentralized approach, creating a nightmare for companies, investors, and ultimately, for Canadians. The proposed Canadian Securities Commission may not bring Canada into the 21st century in financial regulation, but it will help propel it into the latter half of the 20th.
Like the US and Australia, Canada benefits in many ways from a federal system. It is hard to imagine the Quebecois remaining part of a country that did not provide them with the degree of autonomy in matters linguistic that they enjoy. Moreover, it is hard for Ottawa to understand the local issues that as diverse a nation as Canada must address. The European Union strives for subsidiarity -- Canada lives it.
Yet, it is time for the old system of 13 provincial and territorial regulators to go. The idea to replace them with 9 "regionally representative" commissioners is probably not workable, but letting each province and each territory appoint one commissioner to serve on the federal body could be a politically workable solution. What is important is not so much how many commissioners there are but rather than they decide on a single set of regulations for the entire country.
Canada's economy is about the size of California's, give or take a few billion, and to require a nationwide business to comply with thirteen different sets of rules, all designed to keep the economy running smoothly and fairly, is a ridiculous burden. When companies have the choice of operating in Canada or going elsewhere, this excessive cost harms Canadians.
This is not to say the old system was bad. Before the internet, before cheap transcontinental telephone calls, before daily flights across all parts of the country, the provincial/territorial level was likely appropriate. Those days are over, and Canada must change to stay competitive. Although there is provincial resistance in Quebec, British Columbia and Alberta, this is an idea whose time has come. If getting those three to go along costs a few seats on the Commission, it will be a bargain indeed. Now, if someone in the US could explain why insurance is regulated at the state level . . .
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