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Does Canada need a national securities regulator?

There is lots of talk about Canada needing a national securities regulator and very little action. I think that one of the main reasons for this is that in fact, there is no compelling need in Ontario for a national regulator. The cost of not having a national regulator is being borne by issuers (and their shareholders and investors) in places that need to access capital from outside their home turf – Alberta especially, and to a lesser degree, Quebec and the Maritime provinces. Ironically, these are the very jurisdictions that are hostile to a national regulator. In the case of Alberta, I suspect that is of classic ‘interest group politics’ – the small group of folks who might be be negatively affected by the change (bureaucrats, securities lawyers and the like) scream much louder than the large but diffuse group of people who are likely to benefit (all of the issuers in Alberta, and the various shareholders in them). In particular, times have been so good in Alberta lately that no one is too worried about a slightly elevated cost of capital.

Ontario has some of the deepest, broadest, and best regulated securities markets in the world. Issuers in Ontario, other than mutual funds, ETFs and similar vehicles, rarely really need to issue securities outside Ontario. As a result, most Ontario issues rarely incur much true cost as a result of our fragmented regulatory regime. In particular, the biggest issuers of securities in Canada – various governments issuing bonds – really only care about Ontario and foreign markets. Ontario entrepreneurs really do not suffer as a result of the balkanized regime and can comfortably ignore the whole issue.

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