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October 14, 2007

Quebec professor argues against single securities regulator

Quebec professor argues against single securities regulator

A prominent opponent of a centralised Canadian securities commission has argued that there is no urgency to establish a national regulator nor is there any cost benefit in such a move. Jean-Marc Suret, a professor at Laval University’s School of Accountancy, in Montreal, Quebec, has co-authored a report that attempts to debunk recommendations issued by the Crawford Panel report.

There is currently no centralised securities commission in Canada, as the individual provinces provide their own regulation. The Crawford Panel was established by the Ontario government to determine the benefits of a single regulator. In June the panel released an updated version of its original 2006 report.

Suret and Cécile Carpentier, associate professor at Laval University’s School of Accountancy, were commissioned by the Quebec regulatory and oversight body Autorité des Marchés Financiers (AMF) to review the Crawford findings. They produced a report called Proposal for a single securities commission: comments and discussion.

This month, Suret discussed the conclusions of his report at an AMF workshop.

He claimed that the Crawford Panel arguments justifying the urgency of establishing a national securities commission in Canada do not hold up well to analysis. He said arguments regarding the excessive costs of Canadian securities regulation and the financing limits imposed on junior issuers to justify the centralisation of Canadian regulation are highly debatable.

Suret noted that the specific features of the existing market, which he claims welcomes small-cap and growth companies, are highly decentralised and favourable to issuers. He said this must be acknowledged, preserved and improved. 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.

Full details of the report can be obtained on the AMF website.

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