(Adds sharp disagreement from Alberta; support from bankers’ group)
By Randall Palmer
OTTAWA, July 9 (Reuters) - Two more provinces, Saskatchewan and New Brunswick, signed up on Wednesday for a plan to create a national securities regulator in Canada, joining Ontario, British Columbia and the federal government in a project designed to end a patchwork of local regulation.
At a signing ceremony in Ottawa, federal Finance Minister Joe Oliver called on Canada’s other six provinces and three territories to take part in the plan, which he called an important nation-building project. “Canada has a problem,” he said, with 13 provincial and territorial regulators instead of one common one.
“Today’s agreement is a major step towards a single regulator, national in scope, that will enhance Canada’s capital markets,” he stated.
However, Wednesday’s announcement provoked an angry response from the powerful oil-producing province of Alberta, which argued that it was making things worse.
“Today’s announcement confirms our longstanding fear that Ottawa will proceed with changes to Canada’s securities regulation system without the support of two of its largest markets, Alberta and Quebec,” Alberta Finance Minister Doug Horner said in a statement.
“This will leave Canada with a more fractured system than the one we have today. We do not believe that four provinces constitute a critical mass of support for a change of this magnitude.”
The new regulator is scheduled to start up in the autumn of 2015. Draft legislation is scheduled to be published by Aug. 29 this year.
After decades of failed attempts to get all 10 provinces to agree to a national regulator, Ottawa and the governments of Ontario and British Columbia announced last September that they would go it alone and set up a common capital markets watchdog, similar to the U.S. Securities and Exchange Commission.
The hope was that more provinces would join over time and that the current patchwork system of regulators in each province and territory would be replaced with a national system that would be less costly for companies and governments.
Ontario is Canada’s most populous province and home to Canada’s financial services industry and largest stock market. British Columbia is home to a large number of the country’s mining companies.
The four provinces that have joined the project represent 55 percent of Canadian market capitalization. Saskatchewan and New Brunswick represent only 3 percent to 4 percent of market cap but bring important advantages:
- Saskatchewan brings representation from the Prairie provinces and has mining and oil companies, important in the Canadian economy
- New Brunswick has the largest regulator in the Maritime provinces.
Two additional deputy chief regulator positions are being created, representing Western and Eastern Canada, on top of deputy chief regulators for each of Ontario and British Columbia.
The four provinces represent three-quarters of the issuers on the Toronto and Vancouver exchanges.
John Manley, head of the Canadian Council of Chief Executives, said the new system would help small, innovative companies gain access to the capital they need to expand, and will boost competitiveness for all by eliminating duplication and reducing red tape and compliance costs.
“For all these reasons, modernizing the existing patchwork of regulators will strengthen Canada’s attractiveness as a destination for business investment,” Manley said.
The Canadian Bankers Association also welcomed the news, saying it was important for capital market efficiency. (Editing by Lisa Von Ahn; and Peter Galloway)