Kevan Cowan, CEO of the Capital Markets Authority Implementation Organization (CMAIO), remains optimistic about achieving the long-elusive goal of creating a national securities regulator even though Quebec, Alberta and Manitoba have so far declined to join the initiative, which now includes six provinces as well as the federal government.
Referring to the holdout provinces during a speech to compliance professionals in Toronto on Wednesday, Cowan, the seasoned securities lawyer appointed to the position this past autumn, noted that one of his very first acts in his new position was to telephone the heads of those securities commissions.
“If you look across the jurisdictions that have chosen not to participate, their reasons for not doing so have been quite different,” he said. Alberta, for example, has stated that the best way for the province to serve their energy industry is to remain independent. Over time, however, Cowan expects that Alberta will come on board.
“Quebec is different,” he added, “because [the question] is so intimately tied to issues of economic sovereignty and policy. It’s a tough one to predict. But, all I can say is, we will build [the national regulator], we will make it work and I’m convinced that, over time, most, if not all [of the provinces] will see the benefits.”
Cowan was also positive about another key issue that has long-plagued attempts to bridge the regional differences that have stymied efforts to create a national regulator: the distinctly different approaches to raising capital in British Columbia and Ontario, with B.C. generally being more open to ventures by smaller, less established — but also higher-risk — companies. Despite the participation of those provinces, questions have remained in the investment community about how those two styles can work together.
“The two anchor tenants of this project are the B.C. [Securities] Commission and the Ontario [Securities] Commission,” Cowan said. “While it will be challenging to reconcile their different approaches, we have in those jurisdictions, in my opinion, the best representation of the different parts of the Canadian market, in terms of the large companies and the small companies. I’m convinced we will get to a best practice, and an opportunity to enhance capital raising, for all [market participants].
During his comments, Cowan noted that Canada is the only developed nation without a national securities regulator, an issue that dates back to the Great Depression, when it was first discussed in Parliament following U.S. moves to pass legislation in the area. Since then, Canada’s famed ability to survive through compromise among regions and levels of government has not extended to this area. That may be because of the precision of the legislation required to create a common securities regulator. Indeed, Cowan pointed out that if, and when, the new regulator comes into being, it will be the first time in Canada that virtually identical legislation is passed in seven jurisdictions at the same time.
The current initiative follows a reference on the topic to the Supreme Court of Canada in 2011, initiated by then federal finance minister Jim Flaherty. Although the top court concluded that effort to create a national regulator was outside federal jurisdiction, the decision also left a door open, stating that the feds do have authority to legislate in the area of systemic risk.
Using this opening, and the voluntary agreement of six provinces, the current framework designed to develop new legislation was created. Last year, the CMAIO’s board selected Cowan, former president of TMX Group Ltd.’s TSX Markets and TSX Venture Exchange, to be the first chief regulator of the proposed Capital Markets Regulatory Authority (CMRA).
If and when the new regulator comes into being — Cowan anticipates that will be toward the end of 2018 — it will create a “one-stop regulatory shop,” for the first time in Canada, he said. Among the many benefits Cowan cited, securities decisions in one province will apply in all of the other participating provinces.
Although Cowan noted the continuing challenges of getting the CMRA off the ground, he’s still highly positive; in fact, Cowan says he has many “loonie bets” going on as to which province will be the next one to join the historic initiative.
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