B.C. Signs on to National Securities Regulator

Finance Minister Michael de Jong spells out details of an agreement he describes as the first step toward a national securities regulator in Canada

The governments of B.C., Ontario and Canada jointly announced this morning an agreement to establish a “co-operative capital markets regulatory system” in Canada. In an exclusive interview with BCBusiness, Minister of Finance Michael de Jong explains what that means.

What does this agreement mean in practical terms? Does it mean the end of the B.C. Securities Commission?
Not today or next week or next month. But what this does mean is once operational, the B.C. Securities Commission would transition into being the regional office of the deputy regulator, tied in to a national common cooperative regulator. But we’ve got some work to do before we get there.

So this is more an agreement in principle than a practical change of any administrative body or framework?
Yeah, I think that’s why on the first page it says “agreement in principle.”

Do you see this as a breakthrough in moving toward a national securities regulator?
Yes, it is. When you consider that these talks have been going on in one way shape or form for decades, it’s really the first time that multiple jurisdictions have sat down and mapped out what this can look like, how do we establish a single cooperative capital markets regulator for Canada and at the same time accommodate the fact that there are differences in some of the regional markets that need to be taken account of. I believe we’ve struck the right balance here and I’m hopeful and cautiously optimistic that as they study the document that B.C., Ontario and the federal government signed today, other provinces and territories will come to the same conclusion.

Do you believe this can realistically lead to a national regulator, given that Quebec and Alberta remain staunchly opposed to the idea?
I do. And I’m sure that discussion will be had in Quebec City on Monday when we all get together for a regularly scheduled meeting. The part about this that people who analyse it and follow it frequently forget to consider is that NOT going down this path has consequences—and we know what they are because we’ve seen this movie before in Canada repeatedly.
Right now you’ve got a group of provinces that operate under one loosely defined system, and one province that is separate and apart from that system. Part of the challenge is that the province that is separate and apart is the largest part of the market—that’s Ontario. And as a result of the decision from the Supreme Court of Canada [in 2011, declaring the federal Conservative government’s proposed national securities regulator unconstitutional], we know that unless that division is addressed, the federal government intends, indeed I think Minister Flaherty will tell you, feels compelled to introduce legislation that ultimately would create a federal securities commission, creating yet another level of bureaucracy.
This is a way of avoiding that. This is a way on a cooperative basis to create that common regulator that is respectful of some of the differences that exist but also creates some of the advantages that flow from having a common regulator, whether it’s a fee schedule that is simplified, whether it’s an investigative and enforcement function that can be coordinated right across the country—all of that I think is better achieved in the kind of framework that this agreement sets out to establish.

One of the stumbling blocks in negotiations aimed at establishing a single national regulator has been concern that Canada’s biggest capital market, Ontario would have too much power. How does this agreement address that concern?
I have to say that in addition to the consultative work that we did with our industry in B.C., the fact that they have a measure of comfort with this, and that they also take as a very positive signal the fact that the initial co-chair through the implementation phase will be the federal government and the province of B.C.
We’re going to work of course with Ontario and anyone else that joins on. I think Ontario sent a very important signal, and credit to Minister Sousa for taking that step as a way of demonstrating that as important as Toronto and Ontario are to the capital markets regulatory world in Canada, other regions can make and are encouraged to make a meaningful contribution to the evolution of public policy in this area.

Was that move by Ontario to give that temporary co-chair to B.C. a breakthrough in the negotiations?
I think it was an important feature.