EDITORIAL PAGE — National securities body still grounded

The idea of a national securities commission has failed to take flight in Canada despite the dedicated efforts of those who believe it could make the country’s financial markets increasingly fair, efficient and competitive.

Proponents of the idea have made valiant efforts to sell it across the nation, albeit with limited success. In some quarters, the idea of a Canadian securities commission is a lead balloon that will never get off the ground no matter how much hot air is blown into it.

Many Quebeckers, for example, agree with their provincial government’s opposition to the proposal. For political reasons, it is doubtful this entrenched view will change in the years ahead. The idea fares little better in the West, which is concerned that a national commission might run roughshod over regional interests and undermine competitive advantages, particularly in the venture capital markets.

Advocates of a national securities commission say that some of these obstacles are rooted in inertia. They also claim that some of those opposed to the idea are more interested in preserving jobs and fees than in investor protection.

The end result? After another year of dialogue and debate, a national securities commission is no closer to becoming a reality than it was a year ago.

Yet the issue is far from dead. Another call to action came from Joseph Oliver, president of the Investment Dealers Association of Canada, during a recent panel discussion on securities regulation. At the same time, however, he opened the door to other ways to make Canadian markets the fairest and most efficient they can be.

In addition to the creation of a Canadian securities commission, Oliver has suggested alternatives, including a national commission run by the provinces, or a harmonized model of the current system.

Oliver insists that it is not difficult to identify the broad principles of more harmonized and efficient regulation. He believes that a national policy could help eliminate duplication and enhance the effectiveness of various processes, including, for example, prospectus filings for issuers. Reviews would be become “one-window”, with the designated jurisdiction taking the lead.

Oliver believes, as do others, that a national commission, or some variation of it, will increase Canada’s competitiveness in a global economy. As he points out, however, the challenge is not confined only to globalization.

Product innovation and technological breakthroughs are rapidly changing capital markets so as to increase opportunities and risks, and cloud the future for policy makers.

The internet, says Oliver, will have profound ramifications for society and the global economy, “even though we are only beginning to grasp what those consequences will be”. One example is the dizzying growth of on-line stock trading by individuals. He says the global nature of this communication network raises complex issues about trans-border trading, disclosure liability, new issue distribution, compliance and enforcement concerns, as well as credit ring risks.

We agree that global competition and technological innovation will require greater national and international co-ordination and co-operation among regulators. At the same time, however, some issues are best left to local regulators. We hope that more progress will be made next year on these, and other issues, than was made in 1996.