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Protecting investors from unfair, fraudulent practices, and fostering fair and efficient capital markets is an increasingly complex challenge for Canadian securities regulators, a panel told attendees at ASC Connect 2023.
“One of the greatest challenges facing securities regulators is the rapid pace of change happening in the marketplace,” said Brenda Leong, Chair & CEO of the BC Securities Commission. “I think it’s largely driven by technology and innovation and that’s an area that’s really exciting. At the same time, we have to figure out what risks all this rapid innovation might create in the marketplace and for investors. That’s going to be one of the greatest challenges facing regulators around the world.”
The panel, titled “Harmonizing intelligent regulation,” took place during the annual ASC Connect conference, hosted by the Alberta Securities Commission (ASC). It brings together stakeholders from Alberta and across Canada to discuss critical issues and evolving trends affecting Alberta’s capital market.
Moderated by Stan Magidson, Chair & CEO of the ASC and Chair of the Canadian Securities Administrators (CSA), the panel participants included:
- Éric Jacob, Superintendent, Client Services & Distribution Oversight; Executive Director, Enforcement (interim), Autorité des marchés financiers
- Brenda Leong, Chair and CEO, British Columbia Securities Comission
- Grant Vingoe, CEO, Ontario Securities Commission
One of the recurring themes on the panel was the way regulators work together in Canada to address evolving market forces.
Unlike some other countries, Canada doesn’t have a single national regulatory body. Instead, ensuring consistent regulation across the country falls to the CSA, an umbrella organization made up of securities regulators from each province and territory.
By its nature, regulation is a meticulous process, but both Leong and Magidson noted that the quality of the regulations — and the efficiency by which they’re produced in Canada — are remarkable given the number of stakeholders that must be heard.
“One of the aims of securities regulators in this country is to strive for harmonized national rules that will facilitate capital raising across the country,” Leong said. “We’ve got hundreds of staff who work collaboratively to create a seamless network of rules. Do we achieve that all the time? I’d say for the most part, if you look at the rule book, from British Columbia right through to the Maritimes, the rules are the same.”
“In response to the criticisms about how it’s difficult to get consensus — if something comes out of the CSA rinse cycle, it’s a clean product,” said Magidson, “In terms of how we regulate capital markets, I would put Canada’s system up against any in the world.”
In recent years, Canadian regulators, working under the CSA banner, have moved quickly to address emerging market forces. One of the most notable – crypto assets.
Canadian cryptocurrency exchange QuadrigaCX collapsed in 2019 after the death of its founder. Subsequent revelations revealed the company’s fraudulent activity. A similar platform, FTX, which operated a fraud-ridden cryptocurrency exchange and crypto hedge fund, collapsed in 2022.
“QuadrigaCX forced us to grapple with the jurisdiction that we could exercise in this area,” said Vingoe. “Fundamentally, we’ve come to the view that the principles of securities regulation apply quite well to the crypto asset world. They have to be adapted in detail, because the technology is different, but the needs for investor protection are similar. Investors need safe and reliable custody, and to be sure that the assets are there when they want to withdraw them from a platform.”
The CSA’s work developing a regulatory framework for crypto asset trading platforms is just one of a few recent items of focus. Additionally, the organization’s member regulators have been working on client focused reforms, banning deferred sales charges for mutual funds, assessing international recommendations for the development of national sustainability disclosure standards, reconciling differences in the approach to diversity disclosure, and other items critical to Canada’s growth and competitiveness, and investor protection.
Everyone on the panel agreed that Canada’s collaborative approach to developing intelligent regulation is ultimately one of its great strengths, particularly in a time when global conversations about almost any subject can quickly become conflicted.
“I was recently asked: ‘What keeps you up at night’?” said Magidson. “And based on what we’re all seeing geopolitically in the world, there is no discourse. There’s polarization — my way or the highway. And we have the privilege as responsible regulators to talk things through so that we can actually position Canada for huge success globally. It’s a unique institution. It’s highly criticized, but I think when you peel the onion, the CSA is probably one of the best institutions we now have in our country.”
For more information, to see conference highlights, or to replay panel conversation from ASC Connect, visit www.asc.ca/en/asc-connect-2023
