Minister Jim Flaherty’s campaign to create a national securities regulator has progressed about as smoothly as a car crash. His relations with Quebec are strained, the smaller provinces are getting paranoid, and even Ontario—which supports his plan to replace the 10 provincial regulators with a single federal watchdog—is getting frustrated. At a meeting with his provincial counterparts last week, Flaherty was rebuffed yet again. But
still he refuses to give up—and despite the bickering, he’s making progress.
Earlier this year, Flaherty set up a panel to look at ways to reform the system and rid Canada of its reputation as the market’s Wild West. Then last week, the panel hired former Ontario Securities Commission chairman Ed Waitzer to start drafting legislation for a national regulator, whether the provinces were ready or not.
Meanwhile, the provinces, save for Ontario, have rushed to streamline rules under their own “Passport” system, which aims to unify regulations across the country. Some provinces have been talking to the U.S. Securities and Exchange Commission, and Ontario and Quebec have even floated the idea of forming their own alliance. All of this is meant to show that a national system isn’t needed. But each proposal is also a compromise that helps to harmonize the system, and keep a common regulator on the agenda.
The panel could yet come up with a proposal that’s palatable to the provinces, says Ian Russell, president of the Investment Industry Association of Canada. But we could get a national regulator even if it doesn’t. According to some legal experts, if all else fails, Flaherty has the power to strip the provinces of their market fiefdoms by force. And you never know. He just might do it. M
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