In a speech to the Canadian Corporate Counsel Association Annual Meeting in Saskatoon, Barb Stymiest, president and CEO of the Toronto Stock Exchange, unveiled the first sign of a renewed push for national securities regulation.

“Securities regulation is no longer the local or provincial matter it once was. Less and less is it even a national matter. Increasingly, it is an international matter requiring bilateral, multilateral and global solutions. But here in Canada we haven’t resolved our federal-provincial dilemmas,” she observed.

Stymiest noted that although Canada now has two national stock exchanges, they are regulated by 13 securities commissions, including one in the territory of Nunavut, which has 30,000 people, a tenth of 1% of the population. “When regulators vastly outnumber the regulated exchanges, the original logic of our constitution requires a critical look.”

Stymiest said that, “the passage of time has taken a reasonably sensible piece of 19th century constitutional architecture and turned it into a 21st century maze. In a world of increasingly efficient capital markets, this is becoming an unaffordable burden, which almost everyone recognizes.”

She noted listed companies cannot afford the cost of multiple listing in 13 jurisdictions, which have differences that can lead to regulator shopping. Also, regulatory differences, no matter how small, have the potential to be magnified by legal processes.

“These are not academic issues. They cost money. They also cost time, which is also money. They hurt the listed companies that are our customers. And they hurt the investors — institutional and individual — who depend on us for protection. We’re less competitive than we need to be, in other words, in an era when trans-border transactions, among provinces, countries and continents, are raising the stakes for everyone, at a time when Canada wants a bigger slice of the equity market. So anything that impedes more efficient markets — such as regulatory overlap and duplication or a top-heavy regulatory structure — is of concern.”

A national securities commission has had numerous champions, only to fail due to jurisdictional wrangling. The most recent effort was in 1996. “For a time, Ottawa seemed to have most of the provinces on side. But Quebec was wary. British Columbia and Alberta had their doubts. And after a lot of to-ing and fro-ing with Ontario, which wanted $200 million to join in, the whole thing vanished in the pet cemetery of co-operative federalism. But the rationale remains,” said Stymiest.

“Regulatory reform and change are almost impossible when things are roaring ever higher, as they were more than a year ago. Nobody wants to upset a gravy train. The need is clear and the time is right, but there is no clear consensus as to the direction we should take. Nor is the political will, in either Ottawa or provincial capitals, obvious for yet another run at the regulatory elephant. But I can tell you this. The problems of Canadian capital markets are not going to be solved by studiously ignoring them.”

To get the ball rolling, the TSE will be collaborating with business schools across Canada to sponsor a symposia series fostering national dialogue on issues relevant to the efficiency of our capital markets. It plans to include representatives from universities, business, and government to discuss these issues. “Our goal is to build the momentum and the sense of direction to rebuild a national regulatory framework capable of competing, surviving, contributing and prospering in the world that is emerging.”