Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Budget hints at priorities for upcoming […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers


Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

Might the proposed new federal securities regulator weaken regulatory oversight?

The front page of today’s Globe and Mail reports the latest chapter in the federal attempt to create a national securities regulator. (Premiers push back against national securities regulator plan).


Part of the Harper government’s response to the financial crisis was to promise to remedy the patchwork of provincial securities regulators.  If securities regulators are going to avert future debacles reminiscent of the subprime mortgage meltdown, they need to be sophisticated, powerful and well-resourced.  The smaller provincial securities regulators are laughably outgunned when it comes to anticipating the next generation of destabilizing financial instruments.  And as we have learned in past financial crises, the most dubious financial activities gravitate to jurisdictions where oversight is the weakest. 


But a new federal regulatory body would encroach in what has previously been viewed as provincial jurisdiction.  To get the provinces onside with a federal regulator, the feds are proposing that provincial securities regulators could coexist alongside the national securities regulator.  The Globe reports that the Alberta premier is running with this idea by seeking to join with Saskatchewan to create a western securities regulator.



Harper may think it is good political calculus to create a multi-tiered securities regulatory framework, but it is lousy policy if the point of a national securities regulator is to prevent the sorts of financial hocus-pocus that played a starring role in the 2008 financial crisis (or perhaps I should say, ongoing financial crisis). 


Let’s say a company with operations in Alberta, Saskatchewan and elsewhere in Canada wants to issue securities.  Why on earth would it bother with the idiosyncrasies of various sub-national regulatory systems when it could just conduct its business under one national set of rules?  Securities issuance would stampede away from the western Canada securities regulator – unless there was some advantage to working with that body.


To avoid withering into irrelevance, a western Canada securities regulator will have to offer something to attract companies to conduct business via its rules.  The western  Canada securities regulator (or any other provincial regulator) will have a huge incentive to dilute (or become more lackadaisical about enforcing) inconvenient securities regulation.  And if the subnational provincial regulators are tolerant of edgy financial activities, it will become harder for a federal securities regulators to insist on the highest standards for regulatory prudence.  If the feds play hardball with questionable securities activities, those activities will just move to a more accommodating provincial jurisdiction.


This tendency for parallel regulators to produce weaker regulatory oversight has a history of wrecking havoc in the American banking system. US banks can do business under state or federal regulatory regimes.  This produces a tendency for national and state level regulators to compete by relaxing regulatory standards in order to attract banks to their regulatory jurisdiction. This so-called “competition in laxity” among regulators creates a pernicious race to the regulatory bottom. 


The Harper government may think it is making an astute political compromise by creating a two-track regulatory system.  But the new regulatory architecture may weaken overall regulatory oversight by encouraging a “competition in laxity”.  We need to make sure that any new regulatory structure does not create a situation in which purveyors of questionable financial instruments can play regulators off against each other. 

Enjoy and share:


Comment from em larsson
Time: November 25, 2010, 2:31 pm

Your article seems to imply an assumption that the Harper government favours a strong and effective securities oversight system — that it would not want to weaken regulatory oversight. What would lead you to that assumption?

Comment from rcp
Time: November 25, 2010, 3:05 pm

The idea of a Canadian federal securities regulator was proposed long before the meltdown: it was not proposed as a response to it. It hasn’t happened yet because some provinces guard their jurisdiction very jealously.

In an ideal world, the provincial regulators would disappear once the federal regulator was in place. But this will likely not happen, based on the U.S. experience: 75 years after the establishment of the SEC, the state securities regulators are still an impediment to doing business.

Comment from Ellen Russell
Time: November 25, 2010, 5:09 pm

Right you are RCP, see for example “Ottawa’s Long And Arduous Road To A National Securities Regulator (Globe and Mail, May 27, 2020) for an overview of this history. My intended point was only that this proposal became a higher government priority in the wake of the financial crisis. Following the financial crisis, Canada was in the odd position of extolling the virtues of its bank regulation, while having to acknowledge its rather “embarrassing” patchwork approach to securities regulation. Thus it was an auspicious moment to move the ball forward for a national securities regulator.

Em Larson: you are wise to question the motivation of this regulatory proposal. Let’s see: if one wanted to go about creating the conditions that promoted weakened regulatory oversight (without, of course, saying so outright), surely it would be helpful to create a regulatory system that is vulnerable to this “competition in laxity”.

Write a comment

Related articles