In a speech Thursday in Toronto, Ian Russell, CEO of the Investment Industry Association of Canada, took on the age-old issue of just who in this country can better regulate its markets.
There seems room for a great leap forward. Finance Minister Jim Flaherty is banging the drum for a national regulator. Former federal minister Tom Hockin is out studying the issue with yet another learned committee. So there's political will in Ottawa to get something substantial done on the regulatory front, despite the expected resistance from regional interests in Quebec, B.C. and Alberta.
Yet Mr. Russell, who is well respected on the Street, is urging caution and compromise.
“The possibility of market dislocations and uncertainties that may arise from forcing a federal model down provincial throats may be too high a price to pay,” said Mr. Russell, after rhyming off the many reasons why such a federal model makes sense.
With the scars that come from two decades as the investment industry's point man on public policy, Mr. Russell instead suggested an incremental approach just might, gasp, get the provinces and the feds finally speaking with one voice on regulating markets.
His idea, which echoes the thoughts of many pragmatic policy types, would be to give existing national bodies more muscle. It would all start with the Canadian Securities Administrators, or CSA, an umbrella group for the country's 13 provincial and territorial regulators.
In Mr. Russell's view, the CSA should be given greater power to set country-wide rules. OSFI, the federal bank and insurance regulator, could then evolve some sort of partnership with CSA. Over time, the CSA could supplant provincial bodies.It's a stealthy approach, and it's all going to take years to unfold. And one of the wisest of wonks thinks this is Canada's best shot at achieving capital market regulation that's in step with the rest of the industrialized world.