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Ontario Securities Commission enforcement director Tom Atkinson is departing for China, where he will become executive director of enforcement at the Securities and Futures Commission of Hong Kong.Moe Doiron/The Globe and Mail

The Ontario Securities Commission is launching a second challenging search for a top executive in a climate of uncertainty over the ultimate fate of Canada's largest securities regulator.

The commission announced Wednesday that enforcement director Tom Atkinson is departing for China, where he will become executive director of enforcement at the Securities and Futures Commission of Hong Kong. He is leaving after seven years heading the OSC's enforcement division, which is the high-profile unit responsible for investigating and prosecuting securities crimes.

Mr. Atkinson's exit means the regulator will be searching for a new head of enforcement at the same time as it is in mid-search for a new executive director to replace Maureen Jensen, who was promoted to the top job at the OSC following the departure of former chair and CEO Howard Wetston in November. The commission is looking at outside candidates for a new executive director, and will likely now launch an external search for an enforcement director given the importance of the role.

The question, however, is how hard it will be to find top-notch talent as the OSC awaits word about whether – and when – Ontario and other provinces will move forward with their plan to create a voluntary joint federal-provincial securities regulator, which is expected to replace individual securities commissions in provinces that participate.

When Ms. Jensen was promoted to chair and CEO of the OSC last month, it was for a two-year stint, far shorter than the customary five-year term. The decision made sense because the Ontario government is hoping the commission will be rolled into the new regulator within the next couple of years, assuming the project proceeds.

It may prove harder, however, to recruit new senior executives from outside the organization when there's such uncertainty, especially since the Liberal government in Ottawa has been lukewarm in its public commitments to proceed with the Capital Markets Regulatory Authority (CMRA).

Finance Minister Bill Morneau didn't mention the CMRA in his budget on Tuesday, although he said his government will unveil revised legislation this summer to oversee systemic risk in the financial system, which is a parallel part of the new plan for market regulation. There isn't much there to reassure new recruits who already have top-level jobs elsewhere.

Kelley McKinnon, former deputy director of enforcement at the OSC who is now a lawyer in private practice, said candidates for enforcement director will likely be people with a high tolerance for uncertainty.

"I think it could attract somebody who is a bit of a risk-taker, who would say to themselves, 'I believe this capital markets regulator is going to be a go at some point in the not-too-distant future, and if I go in as director of enforcement, I will be perfectly situated to have a leadership role in the new CMRA,'" Ms. McKinnon said.

She believes enforcement has a shorter horizon than policy development, where it can take many years to complete any reforms in the current co-operative system. As a result, policy-oriented jobs could ultimately prove more difficult to fill in the next couple of years than enforcement-focused positions, she said.

"Somebody enthusiastic about enforcement could do great things in a couple of years," she argued.

Joe Groia, a lawyer who was the OSC's enforcement director in the 1980s, said the new regulator could be four years away from launching, given the slow pace of advancement on the project, which means the OSC's next enforcement director may be someone later in his or her career who is seeking one final job before retirement.

For the OSC to attract a broader range of candidates, he said, Mr. Morneau needs to clarify whether the CMRA will go ahead.

"My view is that until the government in Ottawa makes their intentions clear, that uncertainty is going to damage the prospects the commission has of getting the right person for the job," Mr. Groia said.

He said the enforcement director's job has changed greatly in recent years as the size of the OSC's enforcement group continues to grow, requiring someone with deeper administrative experience rather than extensive hands-on investigative experience.

"Because it's such a big group and the budget is so big, I'd really want them to look seriously at bringing in a talented senior executive-type person to manage the whole organization and then have a strong bench of hands-on people who are doing most of the operational decisions."

But bringing in top executive talent requires at least some degree of clarity about the future, and governments need to make a final decision and set out a clearer timeline for the CMRA's launch. The OSC's executive job searches illustrate why Canada cannot spend years in limbo before there will be a notable decline in the quality of oversight of its markets.

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