National securities regulator to be decentralized
OTTAWA — Canada’s new national securities watchdog will be among the most decentralized in the world, with no headquarters and a strong presence in every participating province, according to a draft plan.
The transition team headed by Doug Hyndman says the new regulator should have an office in each of the participating provinces, leaving open where the chief of the new regulator will call home.
As well, the new organization, which will be a Crown corporation called the Canadian Securities Regulatory Authority, should hold board meetings and policy forums “across the country” on a regular basis, the Hyndman report states.
“Decision-making will typically be delegated to management in local offices and balanced by national standards and functional accountability,” says the 54-page report.
The only concession to the fact that most of the employees of the CSRA, as well as most of the activities, will take place in Toronto — home of the country’s biggest stock exchange — is the recommendation that “the specific location (of executive directors) will be based on practical considerations.”
In an interview, Hyndman suggested the idea of a traditional headquarters where all the decisions are made and orders issued to regional branch plant offices was not on for the national regulator.
He agreed the organizational structure might have no precedence in the world.
“Yes the system is unique. Canada is a unique country,” he said
He maintained that having decision-makers spread across the country makes practical sense.
“There are investors and public companies and brokerage firms spread all across Canada. We need people where the activity is on the ground, not where trades are going through the computer,” he explained.
The novel concept is believed to be an attempt to persuade smaller provinces suspicious of an Ontario-centric formation to cede their jurisdiction and join the national body, which has faced formidable opposition from the beginning.
Meanwhile, Finance Minister Jim Flaherty has also asked the Supreme Court of Canada to rule on whether Ottawa has the power to create a national regulator.
Two provinces — Quebec and Alberta — have pledged to contest the issue.
A decision by the Supreme Court, which could theoretically stop the process on its tracks, is expected to take up to two years.
Ontario has lobbied hard to have the headquarters in Toronto, where the vast majority of stock trades are made.
“We’re home to most of Canada’s investment mutual fund dealers, the head offices for the five largest banks, Canada’s senior stock exchange, as well as already having the largest provincial securities regulator,” said Andrew Chornenky, spokesman for Ontario Finance Minister Dwight Duncan.
Canada is the only major industrialized country without a national securities regulator. Each province and territory policies its own regulations, at the same time co-ordinating their efforts through what is known as a passport system.
The transition team set the target date for launching the Canadian Securities Regulatory Authority as July 1, 2012.