Wednesday, July 13, 2005


It may not be a top headline, but this is an important story nonetheless:
Ottawa is launching a fresh, concerted effort to create a single securities regulator in Canada, with Finance Minister Ralph Goodale inviting provinces to a meeting as early as September to try and bridge differences.

Mr. Goodale said a single regulator based on collaboration would be superior to the so-called "passport" system that some provinces are backing.

Under a passport system, companies and brokerage firms would deal with one primary provincial regulator when accessing capital markets, and the other regulators would accept its decisions.

Giving credit where due, Goodale's proposal sounds like the most reasonable way of modifying the system.

I'll take as a given that change is a plus - while I'm all for meaningful regulation, there isn't much benefit in forcing a business to go through similar registration processes in multiple provinces. At the same time, a national standard would ensure better regulation than the "passport" idea, which sounds like a sure recipe for forum shopping (i.e. businesses registering only in whichever province has the most lax standards).

Of course, it'll presumably be the provinces who want to encourage forum shopping that will refuse to sign on. But if enough provinces go with an agreed system, then portability between those provinces will provide some incentive for businesses to move toward the uniform standard.

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