In late June Finance Minister Jim Flaherty announced the creation of a transition office to develop a national securities regulator, and a strong majority of a panel of Canadian CEOs polled by COMPAS Inc. approve. More than 75% of the respondents believe the initiative is a good idea.
When asked to score the future performance of the securities regulator, the 110 panelists gave it a mean grade of 66 out of 100. The panelists also gave Canada’s current securities laws a score of 53 in terms of how well the regulations protect investors, and gave the same score to the Ontario Securities Commission. The U.S. Securities and Exchange Commission earned a dismal 49, down from 61 when panelists were polled on the topic in March 2008.
The respondents clearly have high hopes for a national securities regulator in Canada, and want to see tougher action on corporate fraud, simplification of provincial rules and stronger regulation of the “shadow banking” sector. One-quarter of the respondents believe establishing national standards across all provinces should be the main focus of the regulator, while another quarter believes it should focus on corporate fraud.
But some of the respondents were skeptical (and downright cynical) about the initiative. “The thought of one more, inevitably, Toronto-centric financial agency is no guarantee of any level of successful performance,” wrote one, adding that the regulator will “probably allow the bad actors to continue operations and good ones to flee the country.”
Another CEO asserted the staff working for the regulator will be key to its success. “The laws, rules and regulations are only as good as the people who administer them,” wrote the respondent. “The regulators need to ensure their people are capable and are doing their jobs, as well.”