In Canada, there’s nothing as resistible as an idea whose time has come. Thomas Hockin, chair of the Expert Panel on Securities Regulation in Canada, says the time is right for the creation of a national securities regulator.

Of course, some have been saying this since 1935, when the suggestion was first aired by the Royal Commission on Price Spreads. Hockin’s panel wants to replace our fragmented system of 13 provincial and territorial securities commissions with one regulator that will make public companies more accountable while eliminating overlaps and unnecessary compliance costs.

Were it not for parochialism and myopia (mainly in Alberta, British Columbia and Quebec), we might already have a national commission. Indeed, the federal government, mainly in the person of Finance Minister Jim Flaherty, has decided to ignore constitutional and court challenges and create a national regulator anyway.


Expect an announcement in the budget announcement today. Investors shouldn’t breathe any sighs of relief though. A national regulator is a necessary foundation for sound market regulation, but it’s only one pillar of a viable system.


For Canadian and foreign investors to have genuine confidence in our capital market we need much more. We require truly vigorous enforcement, a knowledgeable judiciary that can move with relative speed and impose meaningful penalties when necessary, and an auditing regime that ensures the fullest possible disclosure and transparency for public companies. The status quo is clearly unacceptable.

Despite rare exceptions such as the Research In Motion stock option accounting case, wrongdoers usually go unpunished. In some cases, notably Bre-X, no one is ever found accountable.

No commission, national or otherwise, will succeed unless the RCMP’s lacklustre Integrated Market Enforcement Teams are replaced with something better funded and better directed, such as a new National Enforcement Branch as part of the new regulatory structure suggested by Hockin’s panel.


Judges will need better training and resources to move with greater speed and expertise to bring cases to conclusion. And laws need revision to ensure that, when convictions result, there are meaningful sentences or fines.

Underpinning these reforms, Canada needs tough, transparent auditing. This doesn’t mean International Financial Reporting Standards, which Canadian auditors are pushing Canadian companies to adopt by 2011. The existing system, Canadian Generally Accepted Accounting Principles, is hardly without faults, but with refinements, it would give investors much more confidence that Canadian companies’ books are uncooked.