The final leg of Finance Minster Jim Flaherty's marathon to win a national securities regulator will be run by a former opponent of the cause.
As chairman of the B.C. Securities Commission since 1987, Doug Hyndman was an advocate for allowing the provinces and territories to regulate the buying and selling of stocks and bonds however they saw fit.
Instead of continuing his opposition, Mr. Hyndman is joining Mr. Flaherty, accepting an invitation to lead the transition office that will spend the next year coming up with a plan to create a national regulator of willing provinces and territories.
"My friends and colleagues might be surprised to see me sitting in Ottawa today," Mr. Hyndman said at a press conference Mr. Flaherty called yesterday to introduce his latest recruit, who will be assisted by Bryan Davies, chairman of the Canada Deposit Insurance Corp. and former head of the Financial Services Commission of Ontario.
The appointment of Mr. Hyndman follows B.C. Premier Gordon Campbell's decision in January to drop his province's opposition to a national regulator.
Mr. Hyndman, who starts his new job next month, elevates the credibility of Mr. Flaherty's project, which is often criticized as a Toronto-centric plan that would allow the Ontario Securities Commission to dictate the rules governing junior resource companies in British Columbia and Alberta.
"It's an inspired choice," said Tom Hockin, the former Conservative cabinet minister who led the committee that provided the intellectual backing for Mr. Flaherty's plan. "It's fortunate that he's not from Ontario. People worry that this thing could be the OSC on steroids. He'll make sure that doesn't happen."
Efforts to create a single authority responsible for financial markets go back decades, always dying in the face of opposition from provincial governments that refused to yield jurisdiction to Ottawa. Opposition has softened during the financial crisis by exposing the systemic risk of leaving the oversight of financial markets in the hands of regulators concerned primarily with their own backyards.
Canada is the only major industrial country that lacks a single voice on securities regulation, inhibiting the country's ability to participate in international talks on the issue.
While the country's financial system has held up relatively well during the crisis, the International Monetary Fund has warned that Canada's web of rules and regulators creates gaps that risk the health of the broader system.
Also, international financial firms, including Goldman Sachs Group Inc., have said the need to register to do business in each of Canada's provinces have caused them to limit their activities in the country.
"In a world that is looking for streamlining and efficiency in terms of regulation, to have one regulator in this country will dovetail into what's going on internationally and that's critically important," said Brian Porter, head of risk and treasury at Bank of Nova Scotia.
Mr. Flaherty and Mr. Hyndman said there is now a "core" group of provinces that support a single regulator, although both declined to name the supporters.
Quebec and Alberta have been vocal in their opposition to the plan. Manitoba, a traditional opponent, is open to co-operating as long as "local service" is ensured, government spokesman Jonathan Hildebrand said yesterday from Winnipeg.
The Opposition Liberals want Mr. Flaherty to submit his plan to the Supreme Court before proceeding, and the federal New Democratic Party maintains securities regulation is provincial jurisdiction.