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Securities • Issues & AdvocacyOSC pans B.C. regulatory plan By SINCLAIR
STEWART The Ontario Securities Commission issued a stinging critique yesterday of a regulatory model proposed by its counterpart in British Columbia, the latest incident in a widening rift between the two provincial watchdogs that has complicated efforts to reform the country's mishmash system of regulation. In a sharply worded response to the B.C. Securities Commission, OSC chairman David Brown said the model would raise costs for listed companies, diminish investor protection and create wider chasms among Canada's 13 territorial and provincial regulators. "Overall, we are concerned that the BCSC has chosen to pursue a significant shift in policy direction that will undermine the progress the [Canadian Securities Administrators] has achieved to harmonize securities regulation across Canada," Mr. Brown wrote in a letter to BCSC chairman Douglas Hyndman. "We are concerned that you may have gone too far in removing prescriptive requirements and relaxing requirements on market participants." The remarks clearly irritated Mr. Hyndman, who suggested that the OSC is "afraid of change" and failed to read the proposal as carefully as it might have. "I guess I had expected a more thoughtful and helpful response," he said in an interview, adding the OSC "got some things just dead wrong." The two sides have been bickering for some time over the issue of a national securities regulator - a topic that has been the subject of flickering debate for decades - but this is the first time the OSC has been so openly critical of B.C.'s position. Mr. Brown said the BCSC's preference for replacing existing rules with a more principles-based style of regulation is "an extreme approach" that would in fact create confusion about compliance matters and therefore increase costs for investors and listed companies. He described a proposal to broaden civil remedies for investors - including stiffer liability standards for directors and officers - as "troubling," and criticized another proposal that would require only firms and not individuals to be formally registered. Mr. Hyndman countered that the B.C. proposal is not moving in an opposite direction to securities regulation in the rest of the world, and insisted that market participants would remain bound by a strict code of conduct. "There are lots of rules in our proposals still: It's not as if we're just going to the Ten Commandments here," he said. "These are not wild-eyed revolutionary ideas." The OSC has been a vocal advocate for combining the patchwork of commissions under a single, unified body. But B.C. has balked at the idea, citing the importance of regional differences, and has carved out its own path for improving the system. There are also fears among some commissions that a centralized national regulator will essentially be a beefed-up OSC, with the bulk of power concentrated in Toronto. The federal government has established a panel of seven "wise persons" to study ways of fixing the regime and examine the feasibility of a national regulator. Meanwhile, ministers from six provinces - B.C., Ontario, Quebec, Alberta, Manitoba and Saskatchewan - formed their own committee to study the issue. It has already rejected the idea of a single federal regulator. Eric Pelletier, a spokesman with the OSC, said the regulator thinks it is more important to create unified rules before individual provinces begin attempting to streamline the system themselves. "We're not afraid of change - absolutely not," he said. "But the first goal is to get harmonization across the country and that will only happen if all jurisdictions are working together." |
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