Speaking to members of the Canadian Venture Capital Association and Toronto Stock Exchange today, Finance Minister Paul Martin called for a common set of securities rules and enforcement, but he stopped short of calling for a national securities commission.

In a speech whose theme was the importance of facilitating innovative financing, Martin touched on a number of competitiveness issues. “The unprecedented economic success of the United States in the 1990s was powered not simply by technology but by innovative financial risk analysis and risk taking, which allowed American entrepreneurs to get their new ideas to market faster than anyone else,” said Martin. “Of course there were problems and of course there were failures. But the lasting legacy of that era was not only the development of innovative technologies, but the development of innovative financing.”

Martin pointed to three key areas that must be addressed to create an environment in which innovative financing can thrive in Canada:

  1. Giving Canadian firms greater access to financing at all stages of their development through venture capital, initial public offerings and high-yield debt;
  2. Developing a more uniform approach to securities, with a common set of rules and seamless enforcement across the country; and
  3. Improving accounting standards and practices and corporate governance to strengthen the confidence of investors in Canada’s capital markets.

“We have to ask ourselves if it makes any sense that Canada has at least 30 different financial sector regulators and as many sets of rules. In that kind of an environment costs can only multiply and efficiency can only decline,” he said. “Quite simply, we need a more uniform approach to regulation, particularly securities regulation, with a common set of rules and seamless enforcement across the country.”

“We understand the historical reasons why our regulatory system is balkanized. But the fact is, in a globalized market we simply cannot afford such fragmentation,” Martin said. “We know that the status quo will not work and it must change. Otherwise, issuers and investors will take their money elsewhere. Let me be clear: I’m not going to prescribe what the mechanism should be, but whatever model is adopted, it must be based on today’s reality, not yesterday’s.”