Doug Hyndman, chair of the BC Securities Commission, has taken issue with much of the criticism of the BCSC’s deregulation proposals leveled by his Ontario counterpart, David Brown.

In a letter to Brown, chair of the Ontario Securities Commission, Hyndman attacks some of the fundamental concerns expressed by Brown. “Some of them reflect differing policy approaches, but it appears that many of them stem from misunderstandings about our proposals,” Hyndman says. “I am writing to correct the misunderstandings and to respond to your other concerns.”

He says that Brown’s comments primarily addressed myths about the BC Model. “Overall, your letter raises false alarms about the changes we are proposing.”

He allows that it looks much different from current rules, but says that is mainly because it is updated, simplified, and written in plain language.

“There is more than one way to design legislation that can achieve the fundamental principles of securities legislation,” he says. “We are trying to find one that does so most effectively while minimizing the burden of regulation on the markets. Investors ultimately pay the costs of regulation, so we owe it to them to regulate in a way that gives them value for their money.”

Hyndman says that BC remains committed to reform, and that it believes the best approach is to streamline the rules and pursue a passport model.

Responding to Brown’s worry that B.C.’s proposals represent lax regulation, Hyndman says, “The B.C. Model would actually provide stronger investor protection than the current rules. It would require more comprehensive and timely disclosure of information by issuers. The clearer and more prominent principles in our proposed Code of Conduct for registrants would cover a broader range of conduct.”

As for the allegation that B.C.’s plan would weaken investor protection and increase compliance costs. He argues, “Our analysis and extensive consultations suggest that our proposals will strengthen investor protection and reduce compliance burdens and costs.” He also refutes the accusation that BC has not analyzed the costs of its plans, having produced an analysis of the Continuous Market Access model, and, he says it is now analyzing the effect on costs of the Code of Conduct, Firm Only Registration and Investor Remedies proposals.

Hyndman also points out that the proposed Code of Conduct for dealers and advisors would not be voluntary, it would be a mandatory set of rules governing the conduct of registrants and reps. He also says the BCSC is confident it would be enforceable and denies that reform can only come on a harmonized and national basis. As well, international opinion of the Canadian system will rely on whether it achieves results, “not on whether our laws look the same as those in other countries,” he says.

“We encourage you not to regard the proposals as threatening but to consider them with an open mind, with a view to providing us specific, constructive comments that could help us refine the draft legislation,” he says.