UPDATE 4-Canada to set up new markets watchdog but scope limited

Thu Sep 19, 2013 6:56pm EDT
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* Ottawa, Ontario and B.C. agree on securities regulator

* Flaherty hopes more provinces will join the plan quickly

* Mid-2015 goal for new regulator to replace provincial ones

* Quebec, Alberta not in plan; Quebec eyes going to court

By Randall Palmer and Louise Egan

OTTAWA, Sept 19 (Reuters) - Canada's federal government and two of its provinces will set up a common securities regulator as a first step toward their ultimate goal of replacing the current patchwork of provincial agencies with a more efficient national markets watchdog.

The federal finance minister, Jim Flaherty, and his counterparts from Ontario and British Columbia unveiled details of the plan on Thursday. Together, Ontario and British Columbia are home to about two-thirds of the country's capital markets.

Ottawa has tried for decades to persuade Canada's 10, mostly reluctant, provinces and three territories to create a national regulator similar to the U.S. Securities and Exchange Commission. Flaherty himself has lobbied hard for it since he became finance minister in 2006 with the election of the Conservative government.

The federal government hopes the new commission will improve Canada's reputation for being lax on white-collar crime. Recently, regulators were criticized for their oversight of Sino-Forest Corp, one of several North American-listed companies with Chinese operations whose accounting disclosure practices came under scrutiny.   Continued...