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Finance Minister Calls for Modernizing Canada’s Capital Markets

On June 27, 2007, Jim Flaherty, Canada’s Minister of Finance, addressed an audience at a conference on Securities Law Enforcement in Toronto.  Flaherty’s presentation focused on the issues impacting Canada’s ability to modernize its capital markets.  Flaherty noted that modernizing the regulation of our capital markets is imperative if Canada is to continue its economic expansion and increasing its competitiveness in the global market.  Establishing a common securities regulator should be the primary focus in a move toward modernization.  Canada currently has thirteen independent regulators.  This approach to regulation has been criticized as “cumbersome, fragmented, slow, repetitive and lacking the proper tools for enforcement,” Minister Flaherty said.  As a result, the government has committed to creating a unified capital markets regulatory system that is more in line with the global competition.  The government has committed to this promise in their “Creating a Canadian Advantage in Global Capital Markets” plan announced in Budget 2007.

The key elements of the plan are:

1.                  Enhancing regulatory efficiency by creating a common securities regulator.

2.                  Strengthening market integrity by enhancing investor protection.

3.                  Pursuing the highest standards of governance and accountability.

4.                  Creating greater opportunity for business and investors by pursuing free trade in securities with certain countries.

5.                  Improving investor financial literacy through distribution of educational material.

Some have expressed concerns that a uniform securities regulatory system will give the federal government too much power or provide Ontario with significant influence over enforcement activities of other provinces.  However, Flaherty assured his audience that neither of these concerns will come to fruition under the proposed structure for the system.  The federal government and each province will have a “seat at the table,” as he described it, with no one seat being able to overpower the other.  Notwithstanding, Flaherty is confident that a common regulator “is in the best interest of Canada and all Canadians”!