A long series of small changes might be the only way to make the transition to a common securities regulator in Canada, the head of the Investment Industry Association of Canada (IIAC) told a Toronto business audience today.

“Too many stakeholders, in too many parts of our country, are not prepared to take the leap of faith required to create a common regulator,” said Ian Russell, president and CEO of the IIAC. “But they might very well be prepared to take a series of small steps. If we cannot achieve revolutionary change, maybe we should focus on evolutionary change. That could get us to the optimal end result more quickly.”

Russell, speaking at a financial services luncheon hosted by the Toronto Board of Trade, commented on the recent task force set up by federal Finance Minister Jim Flaherty called the “Expert Panel on Securities Regulation” and headed by Tom Hockin. First, Russell noted that the national regulator issue has been studied in Canada since the 1960s — including a proposal tabled in June 2006 by a government panel led by Toronto lawyer Purdy Crawford.

“It will be difficult for the Hockin Panel to improve on those earlier works,” he said. “But the Expert Panel could perform a valuable service in moving existing efforts at uniformity further along the road towards a common regulator.”

In order to do this, the IIAC president added, the best place to start is with the Canadian Securities Administrators. “The CSA has done commendable work designing national policies related to prospectus disclosure, continuous disclosure requirements and multiple electronic markets,” he said, adding that since the Uniform Act and national instruments and policies are provincial initiatives, the provinces may be prepared to incorporate the Act by reference in their own legislation.

“Rather than keep trying to roll a boulder up a hill only to see it roll right back down, maybe what we need to do is go from plateau to plateau,” said Russell. “We can start with the CSA and its existing policies.”

Russell suggested that the CSA could serve as the administrative and decision-making structure, by administering the Uniform Securities Act and national policies along with some form of federal cooperation and a national securities enforcement authority. In order for this to be effective, he added, the CSA’s governance structure would have to be refined. As well, he noted, changes would have to be made to address jurisdictional barriers with other regulators — such as those that arose between bank and securities regulators during the asset-backed commercial paper crisis.

Overall, Russell said that he believes most Canadians would agree that a common securities regulator would be the way to go if the country were doing it all over again. “But we aren’t starting over from scratch. We have a lot of historical baggage and institutional roadblocks standing between us and a single regulator,” he said. “Unless there is voluntary collaboration from at least several of the large provinces, not just Ontario, it probably won’t happen.”

In response to a question from audience member Purdy Crawford, Russell said he is looking for “another way to skin a cat” because it has been a “frustrating process to see a good idea, really, not materialize.”