July 15, 2008 Securities Organization

Montréal – The Autorité des marchés financiers (AMF) today released the Brief it submitted as part of the consultation process conducted by the expert panel set up to review securities regulation in Canada. Titled "Single regulator: A needless proposal," the Brief sets out the AMF's position on the key issues raised in the matter of adopting a single securities regulator.

The creation of the expert panel, chaired by the Honourable Tom Hockin, was announced on February 21, 2008 by the Minister of Finance, the Honourable Jim Flaherty. The deadline for submitting briefs was set for July 15, 2008.

Current framework adequate
The AMF's Brief generally concludes that current securities regulation in Canada is adequate in light of the specific features of the Canadian market.

On an international scale, Canada operates a small securities market made up of firms located across a vast territory with needs that vary significantly from region to region and which, for the most part, are financed locally. Against this backdrop, a system of provincial and territorial regulators serves as the most appropriate framework model, as regulators are able to identify and respond more effectively to the specific needs of firms in their jurisdictions, while striving to harmonize securities regulations and processes.

The development of the passport system, which is intended to serve as a single window for firms and their representatives to do business on a Canada-wide basis, is an eloquent example of this ability and willingness to harmonize regulations and processes.

Because of the size of the country, the presence of provincial and territorial regulators also enhances consumer protection. Since securities operations are often local in nature, the proximity of regulators to local markets facilitates the detection of fraudulent practices.

The AMF believes that the adoption of a single securities regulator must be based on a demonstration that such a framework would be superior to the existing system. The Brief underscores that the arguments put forth in support of the federal proposal are unconvincing and do not justify the proposed changes in the current regulatory structure.

The position of the AMF reflects the findings of a number of international bodies whereby securities regulation in Canada is among the best in the world. The AMF therefore considers it paradoxical that the federal government is proposing to replace a system that meets the needs of Canadian firms and investors and has been recognized internationally for its effectiveness. The AMF also notes that the criticism expressed by the federal government against the country's securities industry is tarnishing the industry's reputation abroad and is generally undermining Canada's economic interests.

Within its jurisdiction, federal government should support provincial securities regulation
The Brief also highlights the broad consensus in Canada that a key challenge for securities regulation is more effective deterrence of fraud. This responsibility is shared by a number of players: securities regulators, self-regulatory organizations, police forces and Crown prosecutors. Close co-operation between the federal government and the provinces in this regard is essential. RCMP operations and enforcement of the Criminal Code are the responsibility of the federal government. As such, the federal government is in a position to take concrete action in support of provincial securities regulation within its jurisdiction, without the need to create a single securities regulator. The AMF believes that federal, provincial and territorial authorities should work closely together to:

• raise awareness about the importance of white-collar crime;
• enhance the effectiveness of investigation teams, in particular Integrated Market Enforcement Teams (IMETs);
• improve the tools available to investigation teams.

The Brief is available on the AMF website under the Publications tab ("Guides, reports and other documents on financial sector oversight").

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec’s financial sector.

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