Regulatory framework

Regulatory framework undergoing more changes

July 9, 2014

This week we saw federal Finance Minister Joe Oliver announce that he is resurrecting Jim Flaherty’s initiative to develop a single securities regulator in Canada.

Currently, there are 13 securities commissions across the provinces and territories.  Issuers of stocks and other investment vehicles needing to raise capital to make the economy grow must therefore have approval from up to 13 entities to legally market their wares everywhere in Canada.

This is the only such system in the developed world. All other countries have a national securities regulator. On the face of it, our system sounds ridiculous, but it’s not as bad as it sounds. 

The provincial securities commissions and the Canadian Securities Administrators (the CSA) have worked hard over the last 20 years or so to streamline this process as much as possible. 

A system called NRD (the National Regulatory Database) allows a unified filing process for the registration of mutual fund and securities salespeople, investment advisors and portfolio managers. In most cases, one commission takes responsibility for vetting and approving a registration request, and the other commissions accept their recommendation.

However, those of us who are registered in multiple provinces still know that fees must be paid to each, and approvals are seldom simultaneous.

A similar coordinated system exists for new issues of securities, but there is still plenty of duplication and extra costs. 

The single national regulator was a clear goal of the late Jim Flaherty, Finance Minister for the first eight years of the Harper government. The new Minister has picked up the mantle, calling this initiative the Cooperative Capital Markets Regulatory System.

Joe Oliver and his officials have obviously spent time behind the scenes building consensus among the provinces.  The big news in Wednesday’s announcement was that Saskatchewan and New Brunswick had joined Ontario, BC and as supporters of the initiative.

The provinces not supporting the single regulator still include Manitoba, Alberta and Quebec.

This will be interesting to watch. 

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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.

Please consult legal, tax and investment experts for advice on your unique situation.

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David Christianson, BA, CFP, R.F.P., TEP, CIMis a financial planner and advisor with Christianson Wealth Advisors, a Vice President with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.