October 16, 2007 Organization Securities

Montréal - At the second edition of the Rendez-vous with the AMF, held yesterday in Montréal, Jean-Marc Suret, Fellow at CIRANO, an interuniversity centre of research, liaison, and transfer of knowledge on the analysis of organizations, and full professor at Laval University’s School of Accountancy, discussed the conclusions reached in his new report, Proposal for a single securities commission: comments and discussion.

During the workshop entitled A single securities commission in Canada: myth or reality?, guest speaker Suret gave his perspective on the primary arguments put forth by the Crawford Panel in its June 2007 update of its 2006 report on the establishment of a single securities commission. Prepared at the request of the Autorité des marchés financiers (AMF) by Jean-Marc Suret and Cécile2 Carpentier, associate professor at Laval University’s School of Accountancy and Associate Fellow at CIRANO, this report includes a number of observations, notably:

• The Crawford Panel's arguments justifying the urgency of establishing a national securities commission in Canada do not hold up well to analysis.
• The Crawford Panel's argument regarding the excessive costs of Canadian securities regulation and the financing limits imposed on junior issuers to justify the centralization of Canadian regulation is highly debatable. The Canadian market is by far the one offering growth companies the best opportunities for initial financing, stock market listings and subsequent financing.
• The specific features of the existing market, which welcomes small-cap and growth companies, is highly decentralized and is favourable to issuers, must be acknowledged, preserved and improved. More specifically, the introduction of a system such as the Alternative Investment Market proposed in the Crawford Panel's update would likely prevent many Canadian issuers from gaining a stock market listing.
• As regards the enforcement of legislation, Canada is often compared with the United States. An analysis of data on sanctions in the U.S. reveals that less than 10% of lawsuits related to financial matters originate from the Securities and Exchange Commission and that it imposes less than a quarter of all monetary sanctions. The fight against fraud is a global issue, and cannot be viewed solely as a matter related to securities commissions.
• Canada is improving how it enforces legislation. Performance can be further enhanced through numerous measures other than centralization. In fact, experts mandated by the Crawford Panel do not conclude that centralization is an indispensable condition for strengthening enforcement.

The report is available on the AMF website, under Events/Rendez-vous with the AMF.

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

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