Canada Financial Regulation

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  • Topic: Canada, Regulation, Canadian securities regulation
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  • Published : November 27, 2011
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Canadian Regulatory Landscape
Individual Term Paper


In McKay report to Expert Panel on Securities Regulation, it has been 10 years since the discussion about improvement on Canadian Regulatory Framework that indicate changes have to be done. Major and minor obstacles have been debated since which calls for action of changes. In this research I will try to explain how and why changes are needed for securities regulation in Canada in order to bring our capital market compete-able with the rest of the world while in the same time provides high securities for all the stakeholders and backed by the federal government.

Major obstacles of changes in the last 10 years

In my opinion, there are four obstacles which makes changes in Canadian security regulation are difficult which are:

1. Passport system would be sufficient

This is a system that was introduced in 2003 with the objective of allowing market participant to deal with regulator in its home province to obtain a regulatory authorization that applies automatically in other province and territories except Ontario. With this system implemented in 2008, most of the stakeholders think it will be the solution to combine all the regulation of all the provinces and create simpler, faster and cheaper regulation. Although the passport system has helped streamline the provincial and territorial regulatory regimes, the passport still lack of coordination of enforcement, effective international representation and monitoring systemic risks to Canada capital market. Furthermore, it does not resolve the issue of efficiency and accountability system in 13 provincial and territorial regulators.

2. Voluntary regime

This means that all 13 provincial and territorial in Canada are subject to voluntary option which will requires them to agree to established one national regulator in Canada. As it is explained by the department of finance of Canada “Before making a recommendation to designate a participating jurisdiction, the Minister of Finance would have to be satisfied that the single securities regulatory regime that is established by the Act would apply in the province or territory to be designated”

3. Canada securities administrators

The CSA is an association that brings provincial and territorial securities in Canada together with objectives to design policies which will bring consistencies of regulation across country and it is also existed to ensure the smooth operation of Canada’s securities industries. The association came out with passport system in 2003 which is a one step closer to bring a uniform regulation across country but again they are only the administrator, not a regulator.

4. The need of reference to Supreme Court of Canada (SCC)

Based on the information of Department of Finance of Canada, the government needs the reference from Supreme Court of Canada to provide legal certainty to the province, territories and market participant. The result which is an opinion from SCC then will determine whether the Parliament of Canada has the legislative authority under the Constitution to reform the Canada Securities Act. The opinion takes 10-24 month of filling the notice of references.

Call for action

All the rounds of discussion and call for action in the past 10 years have finally leaded to a meaningful change to the securities regulation framework of Canada. In May 2010, Government of Canada released a proposed Canadian Securities Act which is build on provincial securities regulation and harmonize existing legislation in form of single statue. This happened by the assistance of the Expert Panel on securities regulation which spent 10 month of work on preparing independent advice on regulations, also with recommendation on how to improve structure, content and enforcement securities in Canada. Other form of efforts also helped such as various submissions to the Expert Panel...
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