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OSC Vice-Chair Susan Wolburgh Jenah said that although the OSC had worked with other CSA members to come up with a system that would further harmonize and simplify Canada’s regulatory regime, the Commission believes the current proposal falls short of this objective.
“The proposal moves Canada’s capital market further away from achieving the important objective of establishing a single, consistent set of securities laws,” said Ms. Wolburgh Jenah. “The principal regulator system would allow different standards for public companies doing business in Ontario, creating a competitive disadvantage across Canada.”
The intent of the proposed regime is to create a single window of access for market participants across Canada to comply with a single set of securities laws and to deal with one regulator. However, Ms. Wolburgh Jenah said the system is not based on a single securities code – instead, it permits market participants to comply with different laws based on the location of their head office and, for the first time, would allow regulators to export these different standards into other jurisdictions. The OSC believes this creates inefficiency, an unlevel playing field and will result in increased complexity and confusion for market participants.
The OSC has published its position on the principal regulator system (proposed Multilateral Instrument 11-101 Principal Regulator System) on its website (www.osc.gov.on.ca) and invites public comment. Comments can be submitted up to July 27, 2005.
The proposed system also introduces a number of investor protection risks that appear to outweigh any incremental benefits or improvements to the current system, said Ms. Wolburgh Jenah. It may also effectively limit the OSC’s ability to protect investors in Ontario in situations where public companies based in other jurisdictions fail to meet the OSC’s disclosure standards, she added.
The OSC continues to champion the need for a uniform and streamlined regulatory system in Canada and will continue to work with other CSA members to achieve a single code, a fair fee structure, and streamlined access to the capital markets for all participants, said Ms. Wolburgh Jenah.
The OSC strongly supports a parallel and related CSA initiative to streamline and improve the existing Mutual Reliance Review System (MRRS). The notice explaining the OSC’s position on the principal regulator system also requests public comment on an OSC proposal to amend, in conjunction with other CSA members, a number of MRRS policies and instruments that will introduce further harmonization and streamlining in its existing review processes.
