CALGARY — Alberta and Quebec are seeking allies in their fight against a national securities regulator, urging other provinces Monday to think long and hard before agreeing to the controversial plan.
Ottawa has given provinces until the end of the month to sign “development agreements,” which lay the groundwork for the transition to a single watchdog to oversee Canada’s stock markets.
“It’s an attempt to put pressure on our provincial counterparts and we are urging our provincial counterparts not to sign,” said Alberta Finance Minister Ted Morton, calling the deadline “arbitrary.”
Morton and Quebec Finance Minister Raymond Bachand were in Calgary to sign a letter to other provinces. In it, they encourage those that oppose the proposal, or are still on the fence, not to bow to Ottawa’s pressure.
Alberta and Quebec have been the most vocal critics of the proposal, and are challenging its constitutionality in their respective appeal courts, as well as at the Supreme Court of Canada.
Morton and Bachand are concerned development agreements may be taken as a evidence of provincial support when the three courts hear the case early next year.
The federal government says a national regulator would be more efficient, more effective in stopping white-collar crime and more in-sync with other countries’ regulatory systems.
Canada is the only G20 country without a national securities regulator like the Securities and Exchange Commission in the United States. In Canada, there are 13 provincial and territorial regulators, which critics say creates regulatory red tape and raises the cost for companies who want to list their shares on Canadian stock markets.
However, supporters of the current system say each province and territory should make and enforce its own rules. They say a local regulator would be more familiar with the ins and outs of particular industries — like the energy industry in Alberta, for instance — than a than a centralized body.
For all intents and purposes, Bachand said Canada already has a national securities regulator, through what’s known as the “passport system.” It essentially means decisions made in one province are respected by authorities in another.
Bachand said a “national” system need not be a “centralized” one, like the type Ottawa is proposing.
“It basically is changing the nature of this country. This is not a centralized country. This is a federation,” he said.
Like in any kind of law enforcement, local authorities play a crucial role in prosecuting white-collar crime, Bachand added.
“They have more intimate knowledge of who the crooks are than you’d have in a central system,” he said.
Morton takes no solace in Ottawa’s assurances that regional offices will remain under the new national regulator.
“I find it completely incredible that one thinks that over time there would not be a head office,” he said, stopping just short of calling it a “bait and switch” approach.
“Ontario has yet to endorse the current federal plan. Why? Because it doesn’t specifically say that the head office will be in Toronto.”
A Toronto-based body would be especially bad news for Calgary, Alberta’s financial hub, Morton added.
“Having a securities regulator here is an anchor that supports a whole network of lawyers, accountants and bankers and all of the support staff that go with that.”
Ontario Finance Minister Dwight Duncan said Monday his province fully supports a national securities regulator and will continue to advocate on behalf of Toronto as its headquarters.
“This is where some 70 per cent of Canadian capital markets are located,” he told reporters in Toronto.
Toronto Mayor David Miller jumped in to add that the regulator’s headquarters must be in Canada’s largest city.
“We’re a small country. You don’t have more than one centre of international expertise. This is the centre.”
— with files from Sunny Freeman in Toronto