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Ontario to push for reforms to fragmented securities system

Ontario Finance Minister Dwight Duncan is photographed during an interview in his office at the Frost Building in Toronto December 20, 2011.

Deborah Baic/The Globe and Mail/Deborah Baic/The Globe and Mail

The Ontario government plans to push for reforms to Canada's fragmented system for policing securities markets, after the Supreme Court's rejection of a national regulator.

Canada is the only industrialized nation where market players are forced to deal with 13 different provincial and territorial regulators. And the "passport model" created by provinces opposed to a single regulator does not serve the interests of the Ontario market, Finance Minister Dwight Duncan said in an interview on Thursday.

While the Supreme Court of Canada unanimously declared the federal government's proposed national securities regulator unconstitutional, Mr. Duncan said, it left the door open for the provinces to work together to harmonize the system.

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"I think it's incumbent upon us to do that," he said. "I'm sure that there's a willingness on the part of all the provinces to work together to make the system more efficient."

However, there appears to be little likelihood of the provinces finding common ground, based on the reaction of government officials in Alberta, which along with Quebec led the fight against a single regulator.

Alberta Finance Minister Ron Liepert said he wants the federal government and other provinces to push Ontario to join the passport system, which attempts to harmonize securities regulatory standards across the country.

The passport model allows a publicly-traded company or investment firm to deal only with the regulator in its home province, and other provinces participating in the system automatically accept its decisions.

But Ontario regulators have steadfastly refused to join the system, arguing that it does not eliminate all duplication or guarantee better enforcement.

The challenges with the passport system need to be rectified in order to ensure that Canada has a competitive securities industry, Mr. Duncan said.

"The rules don't all work," he said. "The passport system itself does not serve the interests of the Ontario market, particularly."

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Ontario was the only province that supported the federal government's push to replace the country's patchwork system of securities regulation with a single agency. Premier Dalton McGuinty has argued that Canada's regulatory system is the "weak link" in the country's banking system, which has been recognized globally as one of the strongest in the world.

Even though Quebec staunchly opposes relinquishing any of the province's authority over securities markets, Mr. Duncan said he remains hopeful they can come up with a co-operative solution while respecting each other's jurisdiction.

He said he spoke to Quebec Finance Minister Raymond Bachand on Monday, when federal Finance Minister Jim Flaherty met with his provincial and territorial counterparts.

"We both agreed that regardless of what the [Supreme Court]decision is, we will work together to enhance security markets," Mr. Duncan said.

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About the Author

Karen Howlett is a national reporter based in Toronto. She returned to the newsroom in 2013 after covering Ontario politics at The Globe’s Queen’s Park bureau for seven years. Prior to that, she worked in the paper’s Vancouver bureau and in The Report on Business, where she covered a variety of beats, including financial services and securities regulation. More

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