A new bill to create a national securities regulator is just a month away from being finalized, Finance Minister Jim Flaherty said Wednesday.
Flaherty told a group of bankers at a conference in Toronto the legislation will be ready in 30 days. But he noted that before the bill is tabled, it will be referred to the Supreme Court of Canada for an opinion on the constitutional authority of the government of Canada to legislate security regulation.
Following a speech on the perils of global bank tax, Flaherty was asked how he would succeed in creating a single securities regulator when other finance ministers before him had failed.
"We'll succeed because of persistence," Flaherty responded.
Flaherty's comments were greeted with enthusiasm by many at the conference.
The current system of 13 separate securities regulators "has constantly come up as an inhibitor of success in Canada," said Nick Thadaney, chief executive office of broker ITG Canada Corp.
"It has stifled competition and preserved the status quo," Thadaney added in an interview, referring to the fact that many international asset managers, traders and others have not ventured to do business here because it was confusing just navigating the system. "Anything that makes it more difficult to operate here is not good for innovation."
Flaherty has called Canada's fragmented securities "an embarrassment internationally." The country stands out as the only industrialized country without a national regulator.
That's why, Flaherty said, he has spent four years trying to solve the issue. Although he admitted the government does not have agreement of all provinces and territories on a national securities regulator, he did say that the government has the support of Ontario and British Columbia, "while the majority of other provinces are sitting on a transitional team."
Three provinces, Quebec, Alberta and Manitoba, have not participated in the creation of the bill, although Flaherty added it would be nice to have unanimity. "We want everyone to come on board but our resolve to proceed with a Canadian security regulatory is firm," he added.
While B.C. and Ontario are participating in the drafting of the bill, the two provinces are quibbling over the location of the headquarters.
In March, Ontario Finance Minister Dwight Duncan argued that because Toronto is the financial capital of Canada it would be "an enormous slap in the face" to locate the headquarters elsewhere. B.C. would like the headquarters to be in Vancouver. There has been speculation that the former chair of the B.C. Securities Commission Doug Hyndman, who is heading the Canadian Securities Transition Office, will assume the role of national regulator.
But not all news coming out of Ottawa is being greeted positively. Rumours that the Bank of Canada will hike bank rates is worrying some economists.
Rather than raise rates now, "it would be prudent to wait until we have more evidence of what's going on in the second quarter before jumping . . . but that doesn't look like that's the direction they are going," Brian Bethum, chief economist, Canada, IHS Global Insight, said on the sidelines of the conference. "The Olympics has created a distortion (in Q1) that our economy is doing better then it is."
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