Ontario has long advocated for a national securities regulatory system that features a common regulator, a common body of securities law and one fee structure for market participants. A co-operative regulator would enhance Canada’s profile and competitiveness in global capital markets and promote economic activity across the country.
Capital markets matter. Not just in Toronto, and not just in Ontario, but across the country as a whole. Ontario is a leading North American centre for financial services. It competes globally to attract jobs and investment, and like other places, must continually innovate to remain competitive.
Capital markets help new and existing businesses grow and expand. They finance Ontario’s manufacturing, technology and mining sectors, fuel Alberta’s energy sector and boost venture financing in Vancouver. They also provide investment opportunities to help Canadians meet their savings objectives.
Canada’s capital markets have evolved rapidly in recent years. They are more dynamic and increasingly interconnected. Governments need to keep pace with these changes to ensure regulation, and our regulatory framework, is as efficient and effective as possible.
Last December, the Supreme Court ruled that the Canadian Securities Act advanced by the federal government was unconstitutional. The court affirmed the constitutional authority of the provinces to regulate the securities market but also identified some areas where the federal government could assert authority, such as in systemic risk and criminal law. Yet, the ruling also indicated that a comprehensive regulatory regime could be established through co-operation between the provinces and the federal government.
In light of that decision, provinces should play a leadership role to put in place a new co-operative model. Ontario is prepared to work with other provinces to do just that. A properly structured and co-operatively established single capital markets regulator would offer clear benefits, including more efficient regulation and stronger enforcement. Indeed, it would strengthen the excellent global reputation of Canada’s financial system.
Several fundamental principles underpin Ontario’s interest in a co-operative capital markets regulator. Specifically, a new model will have to provide meaningful benefits to Canada’s capital markets, market participants and investors. We would support a system that reduces regulatory costs and complexity, while also delivering more responsive securities policy-making and more timely regulation and enforcement.
The proposed model should provide strong governance and appropriate oversight of an independent regulator. The new structure will have to reflect market realities and build on existing strengths across the country, including those in Ontario. The transition to the new model must be smooth to reassure market participants.
Ontario firmly believes that provinces can lead in nation-building by developing a co-operative structure that reflects provincial strengths while including an important role for the federal government. Ontario also recognizes that other governments will have their have own priorities that will need to be addressed as we work together to find common ground.
Together, we can create a solid regulatory framework for our capital markets. We have an opportunity to strengthen our foundations for economic growth and build lasting prosperity for all Canadians.
Dwight Duncan is the finance minister and deputy premier of Ontario.