Bill Rice, chief of Alberta’s securities commission and a staunch opponent of the push to create a national stock market regulator, has been named to head the body that co-ordinates development of market rules across the country.
The appointment of Rice as chairman of the Canadian Securities Administrators is likely to create fresh tension between the federal government — which is pushing for the replacement of the current provincially based market regulation system — and provincial regulators who are happy with things the way they are.
Ottawa has argued the current approach, in which 10 provincial and three territorial regulators co-operate under what is called a “passport” arrangement, is cumbersome, costly and not effective in detecting and enforcing fraud.
But Rice, who has been CEO of Alberta’s regulator for more than five years, said he believes it doesn’t make sense to replace the existing regional system with a single national body.
“I think it’s very dangerous to upset something that’s evolved over such a long period of time and has proven to have worked,” Rice said in an interview Friday.
“I don’t think its a good idea to throw something out that’s been tested and tried and found to be very successful at securities regulation.”
Critics of the current co-operative system point out that, unlike the United States and many other countries with advanced economies, Canada lacks a united voice in securities regulation, which makes it less competitive in the global marketplace.
But Alberta, Quebec and other provinces have long been opposed to the federal government’s plan to create such a national regulatory body for provinces that opt in.
Rice, whose term as chairman of the voluntary umbrella organization officially carries a start date of Jan. 17, said he believes that under the current system, all regional interests “are properly respected and represented.”
Paul Gryglewicz, of Toronto-based Global Governance Advisors, said Rice’s appointment could be a signal that the CSA prefers the status quo and appointed Rice as the best advocate for that position.
“It adds friction to the negotiations with the federal government in terms of trying to come up with an amicable solution,” he said.
Rice took over as CSA chairman from Jean St-Gelais, who has stepped down as president and CEO of the Quebec regulator, Autorite des marches financiers. St-Gelais had served as head of the CSA since April 2005. Rice’s term is expected to run two years until March 2013.
During his tenure, Rice will oversee a laundry list of new regulations and global changes that have emerged in the wake of the global financial crisis — from adopting an international accounting standard to pushing ahead with corporate governance reforms.
And he’s not going to let the issue of a national securities regulator distract him from the task at hand.
“It takes some work when you undertake to develop policies on a consensus basis... but the process has worked very well to result in some excellent securities oversight in this country,” Rice said.
However, Rice said he would consider any policies that would lead to tighter and quicker communication between the provinces.
Canada is the only country in the G20 without a national securities regulator, such as the Securities and Exchange Commission in the United States. But Rice argued that is just one of many Canadian policies that make the country stand out.
“I’m sure you can find a number of features about Canada that may be unique in the world, and I don’t think people would start arguing that we must eradicate every unique feature that Canada enjoys,” Rice said.
The creation of a national regulator faces a number of key hurdles, including determined opposition from Alberta, Quebec and Manitoba and lukewarm support for several others.
Both Alberta and Quebec have launched court challenges on the constitutionality of the plan, saying the federal government would be overstepping its bounds if it were to form a centralized watchdog to oversee all of Canada’s capital markets. Ottawa must overcome those challenges in order to proceed.
Meanwhile, Manitoba has indicated it too is opposed to the idea, while British Columbia and New Brunswick have also expressed concerns.
On the other hand Ontario, home to Canada’s largest stock market, has been a leading proponent of creating a national regulator.
The idea also has the support of many business groups, including the Canadian Bankers Association, and has been recommended by both the International Monetary Fund and the Organization for Economic Co-operation and Development.
Finance Minister Jim Flaherty has said he is prepared to go ahead with a single regulator even if some provinces don’t join. However, he also referred the matter to Canada’s highest court to determine if Ottawa has the constitutional power to unilaterally create such a body.
“We’re happy that a majority of provinces and territories are open to working with our government towards a Canadian securities regulator to better protect investors, retirees and families’ savings,” Flaherty said in a statement Friday.
“We want to build on the existing strengths of existing regulators with strong local offices that will benefit consumers, investors and businesses throughout Canada.”