A harmonized platform. The concept of harmonized platform legislation makes a great deal of sense regardless of what other changes may or may not be enacted. A harmonized platform is obviously necessary for any form of inter-jurisdictional "passport" system to be established, and the extent to which the Blueprint makes it clear that existing laws are compatible is very encouraging.

While the concept of local rules is not ideal, it may be necessary in a less than perfect world. The key will be to ensure that such variations are purely supplementary and do not enable a single jurisdiction to undermine harmonized rules or effectively veto efforts to update the harmonized platform.

Updating harmonized rules. The Blueprint notes that under the current system, even non-controversial changes to the rules have taken years to make their way through the legislative process in every jurisdiction. The Council therefore supports the idea of streamlining securities legislation to shift as many provisions as possible from legislative to regulatory. While it will be important not to undermine political accountability, it is vital in today’s financial markets that regulators be able to move quickly and in a coordinated fashion in responding to changing circumstances.

The concept of legal delegation. Giving securities regulatory authorities the ability to delegate decision-making across all regulatory functions is potentially the most powerful element in the Blueprint. This path could deliver the practical benefits of a single regulator without taking away from the ultimate authority of provincial governments. This mechanism also avoids the need for unanimity by providing a means for groups of provinces to act immediately while enabling others to join at a later date.

There are two obvious and important caveats. First, of course, the full benefits in terms of efficiency will not be realized unless the cost savings from delegation are in fact passed through to the customer in the form of reduced fees. Second, the real success of the concept will depend on the extent to which provincial regulators actually delegate their tasks.

While thus supporting the general thrust of the USL Project, I therefore want to emphasize that the Council remains to be convinced that the harmonization process will be preferable to the more direct option of establishing a single regulator for the country, whether controlled jointly by the provinces alone or with federal involvement. Indeed, it seems to me that the concept of delegation logically could extend to the wholesale delegation by provincial regulatory bodies to a new pan-Canadian regulator rather than on a piecemeal basis to one another.

That said, I agree that whatever the ultimate shape of the regulatory structure, harmonization of securities legislation along the lines described in the Blueprint is the necessary first step, and I want to congratulate you and your colleagues involved in the USL Project for the excellent work you are doing in driving forward a constructive national discussion.

For our part, the Council intends to be actively involved in any and all discussions about the future of securities regulation in this country, and we stand ready to help in any way possible. I would ask you to keep the Council updated regularly on your progress, and I hope that you will feel free to contact David Stewart-Patterson or me at any time.

Thank you again for your leadership on this vitally important issue. I look forward to hearing more from you in the weeks ahead.

Sincerely,

Thomas d’Aquino
President and Chief Executive

c.c. The Membership
Canadian Council of Chief Executives