Proposal for single Canadian securities commission problematic, expert warns

A proposed move to a single securities commission in Canada one with a principles-based approach to regulation would do little to cut costs for investors and issuers, experts argued in a report released by Quebecs Autorit des marchs financiers (AMF).
The main arguments justifying the centralization of Canadas securities commissions do not stand up to analysis, according to Jean-Marc Suret, chief author of the report and professor at Laval Universitys School of Accountancy.
Suret made his arguments in Proposal for a Single Securities Commission: Comments and Discussion, and presented the report at the AMFs second annual Rendez-Vous.
Suret says one argument in favour of centralization that the current Canadian regulatory structure leads to significant costs for investors or issuers holds little weight. The costs of the regulatory authorities represent a negligible percentage of the transaction costs borne by investors and of revenues from brokerage activities in Canada, he wrote.
The direct costs of regulatory authorities are lower than those incurred in other countries when expressed on the basis of the number of reporting issuers, he continued.
Finally, arguments to the effect that a single commission would generate substantial savings are less than convincing, he added. Such savings would be possible only if the activities of securities commissions outside Ontario were virtually abolished.