Canadian Securities Regulator
The financial services sector in Canada is regulated at both the federal and provincial/territorial levels. The business of banking is regulated federally under the Bank Act and the securities markets are currently governed provincially. With this system, Canada has 13 sets of rules and regulations administered by 13 different provincial and territorial securities regulators, creating a significant degree of regulatory duplication, inefficiencies and complexity. This system also puts us out of step with the rest of the world: Canada is the only industrialized country without a national securities regulator and lacks a national voice on the international stage.
For many years the CBA has advocated for efficient securities regulation in Canada, with the strong belief that a national regulator would benefit all Canadians. While there have always been good reasons for the creation of a Canadian securities regulator – improved investor protection, better enforcement and fraud prevention, greater efficiencies in the capital markets and a reduction in the cost of raising capital – recent developments have made this reform more crucial than ever.
- Since 2007, international financial developments have changed the financial landscape substantially. It is now clear that financial risks move easily and quickly between capital markets and financial markets. This means that the regulatory system governing the capital markets in Canada needs to be focused, with efficient and timely coordination of efforts between capital and financial market regulators. In Canada, this coordination is more difficult because we have 13 different securities regulators.
- The international financial market turbulence in recent years has highlighted the need for regulators, including securities regulators, to have a structure to deal quickly and effectively with systemic risk, that is, risk that affects the financial system as a whole. The regulatory structure in Canada seems well suited for this in all respects except securities regulation.
- The global financial crisis has shown more than ever that Canada needs to have an effective national voice when international bodies are developing securities regulation. Having 13 different securities regulators limits our effectiveness in influencing global standards governing capital markets. Further, foreign regulators have expressed concern about which group to contact when dealing with Canadian issues. While provincial securities regulators can perhaps be Canada’s ear on the international stage, there is nobody that is Canada’s voice.
In 2010, the federal government drafted a proposed Canadian Securities Act and asked the Supreme Court of Canada to rule on its constitutionality. In December of 2011, the Supreme Court determined that the federal government has the constitutional right to regulate important aspects of the securities markets in Canada, but that the Canadian Securities Act was unconstitutional.
You can read more about our efforts on this important matter through the links below.
- CBA response to Supreme Court of Canada decision on securities regulation — CBA News Release: December 22, 2011.
- Canadian Bankers Association files factum with Supreme Court in support of a national securities regulator — CBA News Release: January 11, 2011.
- Factum of the Intervener, Canadian Bankers Association — Filed with the Supreme Court of Canada concerning the proposed Canadian Securities Act — January 10, 2011
- Canadian Bankers Association welcomes legislation to create a national securities regulator — CBA News Release: May 26, 2010.
- Canadian Bankers Association welcomes launch of Canadian securities regulator transition office — CBA News Release: June 22, 2009.
- CBA strongly supports recommendations from the Expert Panel on Securities Regulation — CBA News Release: January 12, 2009.
- Time for a Canadian Securities Commission; Passport System of Regulation Falls Short — CBA News Release: July 15, 2008.
- Expert Panel on Securities Regulation Welcomed by Canadian Bankers Association — CBA News Release: February 21, 2008.
- The Impact of Multiple Regulators on the Cost of Raising Capital for Small and Medium-Sized Businesses — Using publicly available data, research by the CBA demonstrates that the existing decentralized structure of securities regulation has a substantial negative impact on all Canadian firms’ attempts to raise capital. This burden, however, falls disproportionately on small and medium-sized businesses (SMEs). This decentralized regulatory structure limits SMEs’ ability to tap into all of Canada’s capital market and it imposes high costs on smaller firms. (PDF)
- Banking Industry Commends Federal Government’s Position on Canadian Single Securities Regulator — CBA News Release: June 19, 2006.
- Blueprint for a Canadian Securities Commission — Final report of the Crawford Panel released on June 7, 2006. (PDF)
- The Crawford Panel — Established in May 2005 by the Ontario minister responsible for securities regulation in the province, the Crawford Panel is charged with recommending a model for achieving a securities regulatory framework that features a single securities regulator, a common body of securities law, and a single fee structure. The panel is chaired by Purdy Crawford and its members are drawn from all regions of Canada and a diversity of relevant backgrounds.
- Canada Needs a Single Securities Regulator — A message from the Association for Investment Management and Research (AIMR), co-signed by the Canadian Bankers Association. (PDF)
- Proposals for an Efficient and Effective Securities Regulatory System in Canada — A submission to the Wise Persons’ Committee by the Canadian Bankers Association. (PDF)