Why Canada Needs A National Securities Regulator
It has long been debated whether or not there is a need for a single national securities regulator in Canada. Currently, there are thirteen jurisdictions with separate security regulators in Canada and twelve of the provinces are part of a passport system that was implemented in 2008. While the enhanced passport system allows public companies to access the market across Canada based on a set of harmonized rules, Ontario has yet to participate in the passport system because it favours a common securities regulator which it believes would be more efficient. If ever there was a need for provinces to cede their constitutional power for the national good, it was in the area of securities regulation
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If Canada maintains the current fragmented securities structure that often produces delayed and weak regulatory responses, it is making itself vulnerable to market risks, reputational criticisms and compromising the integrity of Canada’s capital markets as a whole.
The second concern that the Panel expressed was that the current distribution of provincial powers are insufficient to address the scope of national developments in capital markets that are increasingly international. Canada’s capital markets have evolved rapidly in recent years; they are more dynamic than ever, which means that the government need to keep pace with these changes to ensure that regulation, and regulatory framework are as efficient as possible. One of the important lessons from the recent capital markets crisis throughout 2008-2009 is that systemic risk no longer solely confined to banking institutions. The panel reported that in order to effectively address systemic risk, it requires coordination and collaboration of all financial sector regulators in Canada. Unlike a single regulatory body, the current system of provincial and territorial regulators are unlikely to succeed as part of systemic risk management team because different
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Resources must be devoted to keep 13 separate securities regulators operating in Canada. This is inefficient since each jurisdiction dedicates a different level of resources to securities regulation, which causes the intensity of policy development, supervision, and enforcement activities to vary across Canada. In addition, most efforts are duplicative, which results in unnecessary costs, overstaffing, and delays. Canadians, in turn, are afforded different levels of investor protection depending on the jurisdiction in which they reside or invest. Second, market participants will continue to be burdened with undue compliance costs, even with the full implementation of the passport system. Market participants will still have to pay fees in up to 13 jurisdictions. They will still have to deal with the general inefficiencies associated with differences between provincial statutes and regulations, the ongoing use of local rules, and variations in the interpretation of national rules. A common regulator will boost Canadian competitiveness by eliminating duplication, reducing unnecessary red tape and compliance costs, and enhancing oversight. Small businesses will also find it easier to access the capital they need to expand and create
The purpose of this paper is to provide a summary of the article called “Can We Keep Our Promises?” by Robert D. Arnott, and to help better understand the three key risks facing each investor.
In addition, the Federal Reserve did badly on supervision of the financial market. Many banks did not have enough ability to value their risk. The Federal Reserve and other supervision institution should require these banks to enhance their ability of risk valuing.
Since they are financial legislation, Sarbanes-Oxley Act and Dodd-Frank Act have strong relationship with the modern financial markets. This relationship is mainly attributed to the implications that the acts have on market participants, regulators, investors, and markets in general. These acts primarily focus on promoting the health and vitality of financial markets by addressing several practices that could have considerable negative effects on market participants and the economy in general. Actually, Dodd-Frank, which is arguably the most important financial legislation in modern economy, brought significant changes that contributed to changes in th...
With a mixed economy and a ranking of the 6th freest type of economy around the world, makes Canada one of the most popular choices for investors to advance into due to its flexible and improved investment and monetary policies, followed by the growth progress and advances of the Canadian government’s expenditure and its supervision.
The statistics indicate that Canada has primarily been an investor abroad, with substantial amounts of cash flows leaving the country. Again, both of these accounts grew almost every year. Between 1992 and 1997, funds received dropped only once in 1993. Likewise, funds invested abroad dropped only once within this time interval in 1996.
The global financial crisis affected the many advance economies, particularly the United States. Unemployment significantly increased, people were evicted from their homes, and the search for employment was a dead end. However, Canada was not affected with the same force as the United States: “Canada’s financial sector was less affected than most advanced economies and it had the highest bank soundness rating in the World Economic Forum surveys from 2007-2008 through 2012-2013.” Despite the relatively stable status of the Canadian economy, Canada was very much involved in the review and improvement of international financial regulations. Canada was in a position to make changes to financial regulations due to their perceived experience in the matter, as Canada escaped the crisis relatively unscathed. Canadian delegates were placed in charge of four core areas in the reformation of financial policy and, “in all these areas, Canada was able to successfully push for reforms that resonated with its experiences and interests in enhanced financial sector regulation and supervision.” This crisis, and the successful reformations that came out of it, further installed Canada as a leader in economics, firmly inaugurating them as the world’s best bankers.
The presence of systemic risk in the current United States financial system is undeniable. Systemic risks exist when the failure of one firm may topple others and destabilize the entire financial system. The firm is then "too big to fail," or perhaps more precisely, "too interconnected to fail.” The Federal Stability Oversight Council is charged with identifying systemic risks and gaps in regulation, making recommendations to regulators to address threats to financial stability, and promoting market discipline by eliminating the expectation that the US federal government will come to the assistance of firms in financial distress. Systemic risks can come through multiple forms, including counterparty risk on other financial ...
The main reason that Canada could avoid most of the repercussions was probably that while America was structuring a system to achieve maximum access and innovation, Canada was willing to sacrifice some of both in turn for more stability. Throughout history, the United States had always feared centralized monetary
By the end, there was an agreement over adopting a federal government along with delegating responsibilities and powers to provincial authorities’ .But, as a federal system, Canada by contrast to United States had difficulties in distributing the power between the national, provincial governments and territorial governments, because only the first two entities enjoy the major power, and the other smaller entities have only those powers which are directed to them by the provincial government, the thing that made it increasingly decentralized to the point that it became the world’s most decentralized federal system in the world, so decentralization arise when there is a extensive sharing of authority, power, financial issues ,foreign affairs…etc between the different entities of the nation
Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
Major banks are cutting back on some of their legally permitted operations, such as- market making, and that has led to liquidity issues in the bond markets. Proprietary trading could become unregulated if more banking activities continue moving towards the shadow banking system. This would essentially defeat one of the main purposes of Volcker Rule. [d] The third major unintended consequence has been the degree by which the Federal Reserve has become the main regulator of the finance industry. In order to discourage future bailouts similar to the ones during the financial crisis, the Dodd-Frank Act limited the Fed’s emergency powers. However the liquidity and capital standards now imposed by Fed has purportedly become one of the most important regulatory developments of the Dodd-Frank Act.
In 1934 the Securities Exchange Act created the SEC (Securities and Exchange Commission) in response to the stock market crash of 1929 and the Great Depression of the 1930s. It was created to protect U.S. investors against malpractice in securities and financial markets. The purpose of the SEC was and still is to carry out the mandates of the Securities Act of 1933: To protect investors and maintain the integrity of the securities market by amending the current laws, creating new laws and seeing to it that those laws are enforced.
There is a constant flow of cash and funds through the financial system due to the financial institutions as they assist money movement among the borrowers and lenders (lecture notes, chapter 8, 9, 15) a financial institution is basically a firm like a bank which acts as a safe house for depositors to keep their money and also provide loan with interest to others and this how they expand the institution. This is the basic concept of the way the economics works in a country and also how a bank functions. All the banks are connected to one another and if there is a problem in one of the banks the bank looses it image in the minds of the people and if it’s a big problem it can cause disaster within the financial system of the country and this can only be caused due to shortage of liquid cash. To have a proficient system the bank has to be sure to be liquid to avoid any problems. (Chapter 1) To help avoid this problem the government lays down regulations for the banks through prudential supervision (Chapter 2). The Australian regulatory power is Australian Prudential Regulation Authority (APRA), whereas in Singapore it is Monetary Authority of Singapore (MAS). The key concept of their job is to assure the people that their money is in safe hands. Keeping the capital safe is essential as it assists the bank to expand and help them pay off any debts when needed (Chapter 2). In context to if there is an emergency as the government has some control on the banks it asks them to keep some money on the ...
All this occurs under the roof of the same company and is organized in such a manner that Maple Leaf can track and control the operation to their will, to a certain extent. Problems with Value
In conclusion, we feel that the recommendation we have suggested in this report is a suitable foundation to build a sustainable and prudent financial system in this country. This will facilitate the financial industry both, withdraw out of this crisis and in the future avoid as much as possible inducing the scale of matters at present. As the report suggest, everyone contributed in their own miniscule way to this crisis, we feel that it’s up to every one of us to contribute to the overall recovery of this financial crises and recovery of the nation in general.