Federal/provincial battle looming? One securities regulator or many?

This is a hotter issue than one might expect.

The constitution gives the power to regulate securities (stocks) to the provinces. Some provinces, Alberta and Ontario, have careful and thorough regulators -- others don't.

The trouble is that financial markets would be better served by a single national regulator, and this fact has been widely discussed for at least 20 years.

Indeed, the Supreme Court of Canada agreed the could be a federal regulator way back in the 1970's.

But having coexisting federal and provincial regulators would lead to chaos. So all the provinces have to give up their power and that seems, while economically wise, politically unlikely.

We shall see...

Expert panel backs single regulator; Call for provinces to cede authority for securities oversight expected to loom large at first ministers' meeting

The Globe And Mail
Monday, January 12, 2009
Page: B1
Section: Report On Business: Canadian
Byline: Kevin Carmichael and Brian Laghi
Dateline: OTTAWA

OTTAWA -- Finance Minister Jim Flaherty's expert panel on securities regulation is set to endorse the federal government's constitutional authority to regulate the buying and selling of stocks and bonds, a conclusion that risks angering provinces just days ahead of a gathering of first ministers.

Tom Hockin, the former federal Conservative cabinet minister who led the review, will end 11 months of study today by urging provinces to cede authority for securities oversight to a single regulator whose primary mandate would be to guard against risk to the financial system, according to people familiar with the committee's final recommendations.

Mr. Hockin will propose a road map for how the federal government could pursue its goal of a single overseer of financial markets, something Mr. Flaherty and Prime Minister Stephen Harper have promised to do as part of the international response to the financial crisis.

The seven-member panel says Mr. Flaherty should first try to coax provinces to join up voluntarily, according to the people familiar with the report.

If that fails, the report says Mr. Flaherty should allow companies and other market participants to opt to be regulated by the national body, and be prepared to fight provinces in court if they insist on trying to maintain oversight control of those companies, according to these people.

Most provinces have fought a single regulator for decades, arguing that such a body would end up serving Bay Street and miss the nuances of doing business in places such as Montreal or Alberta's oil patch.

James Morton