Canada needs to speak with one voice about securities regulation, especially in light of its key role in the G-20 and other worldwide forums, Doug Hyndman, chair and CEO of the Canadian Securities Transition Office told the Investment Industry Association of Canada 2010 conference today.

“We can punch above our weight . . . and this is the way to do it,” Hyndman says.

The core objectives of the new operation are creation of:

  • One regulator, accountable to all Canadians;
  • One statute and approach to regulation;
  • One voice internationally; and
  • One strategic direction and set of priorities.

And, when it’s up and running, in July 2012, Hyndman says the Canadian Securities Regulatory Authority (CSRA) will:

  • Provide protection to investors from unfair, improper or fraudulent practices;
  • Foster fair, efficient and competitive capital markets in which the public has confidence; and
  • Contribute, as part of the Canadian financial regulatory framework, to the stability of the financial system.

The last point reflects the experience of the last three years and a realization that regulators need to “look for things that are going on systemically that can blow our markets out of the water.”

Conventional wisdom used to dictate it was okay if securities markets players blew themselves up once in awhile. “Now,” Hyndman notes, “it’s clearer there can be a lot of collateral damage if market participants get it wrong.”

He says plans to get the agency up and running by Canada Day 2012 are ambitions, noting half the people he talks with ask why it’s taking so long and the other half think it’s crazy to try and meet that timeline. That split assessment convinces him the schedule is about right, “but we need to have our running shoes on.”

To get the job done on time, the agency will impart some of the harmonized regulations now being used by the provinces. “We don’t have time to rewrite the whole rule book, much as we might like to,” he says.

And, to ensure a continuity of service and minimize business disruption, existing registrations with provincial securities commissions will need to morph into CSRA registrations.

The overall vision is to create a national regulator that will provide:

  • National standards, combined with integrated local decision making;
  • An outward focus with deep understanding of the markets;
  • Responsiveness, innovation and flexibility;
  • A simplified processes and lower costs for the market;
  • Transparency and accountability.

CSRA’s mandate will cover all forms of investments, including derivatives and other alternative products. This will mean fewer opportunities for regulatory arbitrage, or for things to fall through the cracks. And, yes, in response to Anthony Fell’s comments earlier in the day, the new agency will have to deal with credit rating agencies.

Hyndman notes the agency will place emphasis on improved enforcement and will bring the criminal offenses from the criminal code into the Securities Act. “This allows better cooperation between regulators, police and prosecutors,” he says.

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