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Provincial securities regulations vary widely, research finds

Former British Columbia Securities Commission Chair Doug Hyndman.

Tim Fraser for The Globe and Mail/tim fraser The Globe and Mail

The year-long effort to harmonize the regulations in place across all of Canada's provincial securities regulators has convinced Doug Hyndman even more of the need for a national securities regulator in Canada.

The former chairman of the B.C. Securities Commission, who is now leading the transition team designing a new national securities commission in Canada, told a Toronto audience Thursday he has been surprised to discover just how many differences there are among provincial rules across the country.

"There was less harmony than I had thought there was," Mr. Hyndman told an audience of finance experts at an Investment Industry Association of Canada conference.

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"I was finding differences and saying, 'Why are these things different?' Things I had never noticed. The more I work on this, the more I'm convinced that this [national regulator]is the only way to go."

Mr. Hyndman offered an update on his office's three-year project to design a national regulator that could launch in mid-2012 depending on the outcome of a ruling anticipated later this year from the Supreme Court of Canada.

The federal government asked the country's top court to rule on its constitutional authority to create a national securities regulator after Quebec and Alberta said they would challenge the encroachment into what has historically been an area of provincial jurisdiction.

In the meantime, however, Finance Minister Jim Flaherty has appointed Mr. Hyndman to oversee the design of the new system so it can launch as soon as possible if the court ruling is favourable.

Mr. Hyndman said his team's first step was to develop a new national securities act, which was tabled in Parliament in the spring of 2010. Since then, staff have been working on the even more complex task of harmonizing the different securities regulations in place in each province, which cover everything from prospectus offerings to corporate filings to registration of employees in the industry.

He said his staff have found at least 120 different "carve outs" where provinces have their own rules that vary from a national instrument that has been adopted to cover a subject area. As well, there are 800 local rules and policies covering issues not subject to a national instrument.

Transition office staff have made decisions about how to harmonize those differences into uniform national standards, and the proposal will be released for public comment once the Supreme Court decision has been released, Mr. Hyndman said.

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The greatest number of differences lie in the regulations governing exemptions for private placements of new securities, he said in an interview after his speech. He said British Columbia and Alberta have many of the different standards.

The transition office is also developing new fees that will be charged to companies and individuals seeking approvals and registration. Mr. Hyndman said the task is difficult because provinces currently charge differing fees, and his office is "trying to avoid big shifts in the burden."

Mr. Hyndman said the federal government has assured staff of participating securities commissions that they would remain employed by the new national regulator, but Mr. Hyndman said employees won't all necessarily do the same jobs at the new regulator. He said it is too early to advertise or fill new posts that will be required at a national commission.

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Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More

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