Flanked by the finance ministers for Ontario and British Columbia, federal Finance Minister Jim Flaherty announced a surprise plan Thursday to create a single regulator for publicly traded companies in the two provinces – a key step toward establishing a unified national regulator.
The move will merge the oversight of capital markets including regulation of publicly listed and traded companies from provincial authorities in Ontario and B.C. into a single organization that will be based in Toronto, Flaherty said at press conference in Ottawa.
“The cooperative securities regulator will better protect investors, enhance Canada’s financial services sector, support efficient capital markets and manage systemic risk,” the minister said.
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The plan moves Canada closer toward a U.S.-style system to police the stock market, a model adopted by virtually every other industrialized country in the world. In the U.S., a single, federal body—the Securities and Exchange Commission, or SEC – monitors and oversees that country’s public markets.
Thursday’s announcement means “a single regulator will be administering a single set of regulations and be operationally independent and self-funded through a single set of fees,” Flaherty said.
It will be directed by an “expert board” of independent directors.
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“By pooling provincial and federal expertise, the cooperative securities regulator will contribute to a stronger economy, improve investor protection and better respond to increasingly competitive, dynamic and global capital markets,” said a release from Department of Finance.
Flaherty has been advocating for a national regulator for some time. His job now will be to convince other provinces to cede some of their powers to the new national “cooperative” regulator based in Toronto.
In 2011, the Supreme Court of Canada ruled a federal regulator infringed on some provincial constitutional responsibilities.
Right now, each province is responsible for its own regulation of companies that issue shares and bonds to investors, enforcing laws designed to protect them from fraud and other forms of manipulation.
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