In a speech opening the Investment Dealers Association’s annual conference in La Malbaie Quebec this morning outgoing IDA chairman Jacques Menard lashed out at regulators for not providing optimal conditions for capital formation in Canada.

Menard said, “I think it’s fair to say that our regulatory framework has failed to keep pace with recent dramatic changes in investor and issuer behaviour, globalization, financial services deregulation and technological developments. It’s also fair to say that Canada’s balkanized system of multiple regulators and multiple jurisdictions contributes mightily to a costly, inefficient and slow regulatory process.”

Menard stressed that regulatory reform should be relevant to the realities of an increasingly global marketplace and it needs to be cost-effective and timely.

He focused on several recommendations for improving capital formation, notably changing the integrated disclosure system, reforming private placement markets and escrow rules to help reduce the cost of capital. He also recommended harmonizing rules and regulations, “creating a level playing field among institutions offering similar products and services and creating similar rules across the country.” He also stressed the importance of eliminating overlapping and duplicative regulation.

All of these recommendations came in a speech addressing the importance of the capital markets to the Canadian economy and society. He noted that half of Canadians are now invested in the market, either directly as retail investors or through institutions.

The pervasive fear for Canadian market players is the possibility of having their businesses marginalized in favour of bigger U.S. dealers and markets. Menard signaled this fear, noting, “an excessive and unbalanced dependence on foreign capital would have impacts on monetary and fiscal policy. In such circumstances, the impact on the economy would be immediate, the consequences for the body politic no less real.”