Canada Officials Forge Securities Plan

TORONTO -- - The fragmented securities system in Canada took a step toward harmonization as regulators called for uniform securities laws across the country and increased punishment for violators.

The proposal by the Canadian Securities Administrators, the umbrella group of Canada's 13 provincial and territorial securities regulators, builds on a March 2002 promise to adopt uniform securities legislation in Canada.

Chief among the proposed changes, provincial regulators would streamline registrations by firms and allow regulators to delegate decision making to each other, so as to avoid regulatory overlap.

If approved, applicants would only submit applications in one province, and the regulator's decision would carry throughout the country.

Attempts to create a single regulator have been opposed by some provinces, such as Quebec, British Columbia and Alberta but the new proposal would get around a loss of jurisdiction by the various provinces and territories.

The proposal is part of a two-year plan to adopt a uniform securities act across the county, with a focus on harmonizing current laws rather than introducing big changes.

The Ontario Securities Commission, which regulates trading in Canada's richest province, said the proposal provides for one-stop shopping by industry participants.

"We believe that it will result in streamlined regulation and more uniform laws to provide more protection from fraud which will encourage more investment," Paul Moore, vice-chair of the OSC, told Reuters.

Regulators have been scrambling in recent months to tighten securities and corporate governance standards, hoping to restore investor confidence in equity and capital markets after the downfall of high-profile US companies such as Enron Corp. and WorldCom.

Among other changes, the CSA wants to increase civil liability for stock market participants, and raise financial penalties and prison terms for securities violators.

The maximum fine for offenses would be increased to CAN$5 million, while the maximum imprisonment term would be boosted to nearly five years, mimicking provisions contained in the recently passed, but not yet approved, Ontario Securities Act.

The Ontario Finance Minister applauded the proposed changes, calling the current fragmented regime a "red-tape nightmare" for Canadian companies.

"We must work to pursue streamlined regulations and more uniform laws to provide more protection from fraud, which will encourage more investment," she said in a statement.

As part of the recent campaign to clean up governance, the Canadian government commissioned lawyer Harold MacKay in November to study improving securities regulation.

MacKay said the current system was "inadequate" and recommended the establishment of a "Wise Person's Committee" to review the current system and recommend changes by Sept. 30, 2003, stopping just short of calling for one national regulator.

"It may well be that this project is so successful that no further steps are required," the OSC's Moore said. "But if we do need to take further steps and set up a national body that has input from the provinces, that won't work unless we have one set of laws."

The proposal is open for comment until April 30, and could be ready for for consideration by the provincial and territorial legislators by early 2004.