OTTAWA/TORONTO (Reuters) - Canada’s proposed national securities regulator would have a strong presence in all corners of the country, according to a blueprint released on Tuesday that also set new deadlines for reform.
In the document, the Canadian Securities Transition Office, set up by the federal government, laid out detailed plans of how to carry out the politically delicate task of replacing 13 provincial and territorial watchdogs with a single oversight body in July 2012.
The plan has met fierce resistance from two powerful provinces, Quebec and Alberta, but will go ahead with willing provinces and territories, Ottawa has said. Governments have until September of this year to sign on to the plan.
Ontario politicians have lobbied hard for Toronto, the provincial capital and the country’s financial hub, to house the headquarters of the new regulator, media reports said. The Toronto Financial Services Alliance, an industry group, said housing the regulator in the city makes pragmatic sense. But doing so could irk some other provincial capitals.
Department of Finance spokesman Jack Aubry said no decision had been made yet regarding a head office.
The transition plan appeared to respond to fears that a regulator based in Toronto would not properly address investor needs in local markets. It suggested a strong role for provincial offices and policymakers as well as a gradual phase-in of national standards.
“I don’t think there will be headquarters, or head office, in the traditional sense. It’s not that type of organization,” said Larry Ritchie, executive vice president and senior policy adviser at the transition office.
“Clearly the chief regulator will be located somewhere. That issue is something that will have to be worked out over the next year or so as the plan becomes more refined,” he told Reuters.
Canada’s patchwork regulatory system is unique in the Group of Seven major industrialized countries and Finance Minister Jim Flaherty, the main driver of reform, has called it an “embarrassment”.
Ottawa argues it would be easier to oversee markets and crack down on white-collar crime across the country under a single regulator, as well as to co-ordinate with the U.S. Securities and Exchange Commission and regulators in other countries as global financial reforms are launched following the financial crisis.
Canada’s current minority Conservative government has come closer than any of its predecessors to launching a single securities regulator.
But it still faces formidable obstacles. Quebec and Alberta have launched court challenges to the reform on the grounds it encroaches on their jurisdictions. The Canadian government has asked the Supreme Court of Canada for its opinion, which is not expected until sometime after April next year.
Joseph Groia, a Toronto securities lawyer, said that in taking pains to ensure that decision-making would be spread evenly across the country, Ottawa is effectively weakening the new regulator.
“The new system looks like it’s going to be just as fractured,” he said.
The transition plan contemplates parliamentary approval of legislation by December 2011. There could well be an election before then, and even if the Conservatives maintain their minority standing they will face a skeptical opposition.
“I can’t even speculate on that,” Ritchie said. “Our instructions and our approach is just full steam ahead.”
Editing by Peter Galloway