With the demise of the latest effort to craft a national securities regulator, it’s finally time to learn to stop worrying and love the Canadian Securities Administrators (CSA).
When the news broke about the decision to mothball the Capital Markets Regulatory Authority (CMRA) project, few were surprised — and fewer still were disappointed. The initiative hadn’t produced any signs of progress for a couple of years, and the Covid-19 pandemic provided an adequate excuse to finally put a bullet in it.
Yet, the dream of national regulation will surely live on. In theory, the case is a no-brainer. Canada is a small player in the global markets, and a fragmented provincial regulatory system is needlessly complex and inefficient. In practice, however, the current system works relatively well. If nothing else, the CMRA project shows the difficulty in crafting an alternative that can win universal approval.
Industry and investor advocates have touted the idea of national regulation, but their enthusiasm quickly evaporated when time came to implement a new authority with new laws and rules.
The past year once again demonstrated that Canada’s existing regulatory framework may be weird and wonky, but it works. Regulators have pulled through two major crises in the past dozen years.
While the CSA often takes what seems like an unconscionable amount of time to reach consensus on basic policy issues — such as tougher conduct standards and fund-fee structures — in an emergency, the CSA has proved nimble and responsive.
Canada being the only major country in the world without a national regulator is peculiar. But our weird system seems to suit our awkward union. The country itself is odd — geographically vast, yet sparsely populated, and eccentric both politically and economically. A decentralized system with a veneer of co-ordination and co-operation doesn’t sound appealing, but seems to do the trick.
It’s time to focus on improving what we have, rather than aspire to be something we’re not.