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Canada To Streamline Capital Markets

by Mike Godfrey, for LawAndTax-News.com, Washington

21 June 2007

Canada's Finance Minister Jim Flaherty has announced that the government is moving forward with proposals to make the country's capital markets more competitive.

At the conclusion of his meeting on Tuesday with provincial and territorial ministers responsible for securities regulation, Flaherty issued the following statement:

“We had a productive meeting, a good exchange of views, and I stressed the importance of creating a Canadian advantage in global capital markets. The objectives are to give enterprises of all sizes better access to capital at more competitive costs, provide investors with increased investment choices and create more jobs for Canadians."

"In particular, I highlighted the advances Canada’s New Government has made since releasing our capital markets plan earlier this year."

Flaherty explained that these initiatives included:

  • Naming a senior expert advisor, Nick Le Pan, to the RCMP to bolster the fight against white-collar crime;
  • Tabling amendments to Canada's bankruptcy and insolvency laws to improve protection of financial contracts, including derivatives;
  • Consulting with provincial securities commissions on draft regulations for principal-protected notes issued by banks;
  • Drafting a paper, to be issued this week, to align federal statutes with provincial and territorial securities transfer laws; and
  • Leading discussions with the US Treasury Secretary, other finance ministers from the G7 and key partner countries on free trade in securities.

The federal government has also reviewed progress made by provinces and territories and the Canadian Securities Administrators to harmonize and streamline securities regulation. Flaherty revealed that all ministers agreed that these steps are constructive and will lead to lower regulatory barriers and reduced costs for issuers and investors.

"This advantage requires a shared commitment to enhance the effectiveness, content and structure of capital markets regulation, in particular by improving enforcement and by favouring proportionate, more principles-based regulation," Flaherty noted.

In parallel to existing efforts to streamline and harmonize securities regulation, the government of Canada will form a third-party experts group to advise on:

  • The outcomes, principles and performance measures that will best anchor securities regulation and the pursuit of a Canadian advantage in global capital markets;
  • How Canada can best promote and advance proportionate, more principles-based regulation, starting from existing harmonized legislation and national and multilateral regulatory instruments;
  • How this progress could facilitate, and be reinforced by, better coordination of enforcement efforts;
  • How this approach to regulation could be implemented under a passport or under a common securities act and a common securities regulator; and
  • The transition path, including key steps and timelines, that participating provinces and territories could adopt to effect proposed changes to the content, structure and enforcement of regulation.

Flaherty said that the expert group will deliver an interim report to the Minister of Finance and ministers responsible for securities regulation by December 2007, focused on the first three items, followed by a final report by the end of March 2008.

"I will continue discussions with my provincial and territorial colleagues on how we can move forward on these issues in the weeks and months ahead," Flaherty concluded.

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