The gloves are finally coming off in the federal government's push for a national securities regulator.
Opposition from three provinces - Quebec, Alberta and British Columbia - has blocked creation of a single market watchdog, and preserved an archaic system that Tom Hockin correctly described Monday as "too slow, too cumbersome and too expensive."
There are legitimate concerns in these jurisdictions with any new regulator that hands too much power to Toronto financiers. However, Mr. Hockin and his colleagues from every region of the country have met those concerns by sketching out a framework for a decentralized commission, rather than what the former federal cabinet minister called "an OSC on steroids."
In a major breakthrough, B.C. politicians have indicated the province is on side with the concept, pending talk. That paves the way to forcing the issue, and Mr. Hockin and his crew have sketched out a plan for bringing reluctant provinces into the fold.
In simple terms, the commission wants to let market forces dictate which regulator wins the day.
The Hockin report holds out hope that every province will join the new regime on its own merit.
"If, however, after a reasonable period of time, some provinces or territories remain outside of the new structure, market participants - issuers and registrants - in those non-participating jurisdictions should have the opportunity to opt in and reap the benefits of a single, national securities regulator," said Mr. Hockin.
In other words, if an Alberta- or Quebec-based company or money manager sees an advantage to being federally regulated - cheaper capital costs, less red tape - that player can simply quit paying fees to a provincial securities commission, and opt for the national agency.
Based on the advice of blue-chip securities lawyers, including learned counsel from Calgary, Vancouver and Montreal, such tactics are constitutional, as is the unilateral imposition of a national commission.
If the government of Quebec wants to take this issue to the Supreme Court, by all means let the province enrich lawyers by doing so. In the meantime, Quebec companies will have the freedom to choose their regulator when they raise capital.
Political types argue that the timing is wrong on a national commission, that the federal government should focus on horse trading with the provinces over economic stimulus. Frankly, there's always a reason not to move on a national securities commission, or any other worthy initiative. As a former federal cabinet minister, Mr. Hockin knows this.
There's also never been a better case for improving the capital markets than the current economic crisis, which reflects ill-conceived policy and poorly applied regulation in just about every market, around the globe.
"The steps we are proposing are both overdue and essential," Mr. Hockin said on Monday. "They will finally provide Canadians with true national accountability across the full spectrum of financial regulation and align Canada with emerging trends in international financial markets."
Mr. Hockin's got it right, The federal government should adopt his committee's work, push forward, and let companies and other customers of reluctant provincial regulators decide which regime they will patronize.
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