Wooden dominos falling

Your editorial “Time to act on the CCMR” in the October 2020 edition of Investment Executive is timely to encourage the participating provinces and the Co-operative Capital Markets Regulatory System (CCMR) board to “fill or kill” the cooperative regulator project.

Contrary to your historical overview, the well-intentioned project had good fortune in its formative years in the visionary and strong leadership of the late federal Finance Minister Jim Flaherty, and in the project’s reignition as a cooperative federal-provincial regulator after a Supreme Court decision gave jurisdiction to the provinces.

The project has enjoyed wide support in the financial sector, including the Canadian investment industry. We were realistic in knowing it would take some time to bring all the provinces into the model, but optimistic it could be done. Your editorial overstates the obstacle of recent reforms, which relate to rule efficiencies, streamlining and advisor-client conduct — rules that are easily incorporated into the cooperative model.

However, as time marches on, the absence of a champion of the CCMR and other factors have conspired to undermine progress.

The Canadian Securities Administrators (CSA) have been effective and cooperative in the national rule-making exercise of the client-focused reforms. Even if momentum on the cooperative project picks up, it would draw on resources that are now badly needed to strengthen governance and introduce structural reforms to the self-regulatory system, renovate the National Registration Database, reform the consumer redress system and further streamline rules recommended by the CSA and Ontario Capital Markets Modernization Taskforce.

Moreover, many provinces are still entrenched outside the cooperative regulator. This regulatory disharmony would not be much improved even with the cooperative regulator. Finally, incremental progress is racking up significant costs from having a partial infrastructure in place.

We should draw a line in the sand. The participating governments and CCMR board should define a strategic approach: either build a defined strategic plan with realistic milestones to complete the project in a year or so, or dismantle the project.

Ian Russell is president and CEO of the Investment Industry Association of Canada, the national association representing the position of Investment Industry Regulatory Organization of Canada-regulated dealer member firms on securities regulation, public policy and industry issues.