Establishing a national securities regulator in Canada would represent a step backwards and weaken many of the advantages of the existing provincial regulatory system, says a just-released study.
"Moving to a national securities regulator would undermine many of the benefits of the status quo without bringing any tangible benefits to the table," Pierre Lortie, a former head of the Montreal Exchange, says in the report published by the Institute for Research on Public Policy.
The needs and interests of Canadians would not be better served by a national securities commission, according to the study.
Mr. Lortie says his own assessment of the performance of Canada's decentralized securities regulations structure concluded that it compares favourably with the systems in other countries. This is in large part due to the high degree of coordination among provincial securities commissions, with – for example – reporting systems that are national in scope and nationally harmonized standards.
He singles out the fact that the existing system is tailored to regional economic differences as being a key advantage.
Even if the Supreme Court of Canada – which is expected to rule later this year – finds that a proposed national securities regulator is constitutional, that would not necessarily justify it as being sound public policy, according to Mr. Lortie.
The federal government has been pushing for the creation of a national securities regulator, a move strongly contested by Quebec and Alberta.
Ottawa asked the country's top court to rule on its constitutional authority to create a national securities watchdog after Quebec and Alberta launched challenges to what they say is the encroachment into what has traditionally been an area of provincial jurisdiction.
Proponents of a national regulator say the existing system of provincial and territorial regulators is a costly, inefficient patchwork that is an embarrassment for Canada on the world stage.
Both the OECD and the IMF are also on the record as saying a national regulator would represent a marked improvement over the current system.
The OECD has said that a single regulator would eliminate inefficiencies and reduce the risk that financial firms will choose to issue securities in other countries.
It also commented that the existence of multiple regulators results in inadequate enforcement and inconsistent investor protection.
In 2009, the IMF stated: "A federal regulator could coordinate more readily with other regulators in monitoring risks and responding to a crisis ..."