The Canadian Securities Administrators (CSA) has published an open letter addressing the Ontario Finance Minister, to respond to a final report issued by the Ontario Capital Markets Modernization Taskforce.
In its letter, the CSA strongly recommends that Ontario join the regulatory passport system being used across the country – a suggestion that that CSA says was notably absent from the taskforce report delivered to the minister on Jan. 22. It also strongly encourages the minister to empower the Ontario Securities Commission (OSC) to prioritize 16 of the taskforce recommendations that already align with key CSA projects, and asks for time to consider the 26 other initiatives being proposed.
Risks creating inter-jurisdictional friction
“A highly harmonized securities regulatory system ensures the best possible outcome for the Canadian capital market. Attempting to implement many of the recommendations outside of CSA mechanisms and processes would risk creating inter-jurisdictional friction and adding regulatory burden on market participants across Canada,” says Louis Morisset, chair of the CSA and president and CEO of Quebec’s regulator, the Autorité des marchés financiers.
In the letter, penned on behalf of all CSA members except the OSC, the CSA goes on to say that Ontario remains the only jurisdiction in Canada that has not adopted the passport system. They say embracing the passport rules would reduce regulatory burden for market participants, introduce speed in regulatory decision-making and eliminate the cost of dealing with multiple regulators. “This can be achieved quickly and easily as the rule is already in place and would yield immediate benefits,” Morisset adds. “We urge the Ontario Finance Minister to act in the best interest of all Canadian market participants and adopt the passport rule.”
The CSA adds that proposed changes to regulatory mandates in Ontario, such that the OSC is charged with the task of fostering capital growth as well, are also of concern to the CSA and should be approached with caution. They also add that some of the report’s recommendations aimed at changing enforcement would risk reducing the efficacy of the securities regulatory system as a whole.
“It is imperative that all policy-development work, current and future, be subject to a robust process which not only includes countrywide public consultations with all stakeholders, but also includes appropriate research and cost-benefit analysis,” they stated.
