Mr. Speaker, I thank the member for Beauce for sharing his time with me.
I am pleased to have the opportunity to speak in opposition to today's motion and, more broadly, for the pressing need to improve the securities regulation in Canada.
While current global market turmoil has led many to call for strong regulation of financial markets, this issue is not new to our Conservative government. In fact, it had been a key priority for us from the start, as our government's mandate began in our initial election in 2006.
As outlined in budget 2006, we recognized that, and I will to quote from that budget. It states:
An important foundation for a strong economy is a regulatory regime for the securities market that ensures market integrity and investor protection....All jurisdictions recognize that Canada’s securities regulatory system must be improved to respond more rapidly and effectively to regulatory and market developments at home and abroad.
Since 2006, we have worked towards improving that system, most notably through the work of the expert panel on securities regulation. However, during that time, the global economy has dramatically changed. Market turmoil that began in 2007 in the United States, sparked by the havoc wrought by toxic subprime mortgages on their domestic housing market, has exploded into a synchronized global recession.
The global financial crisis has thrust the role of regulation and the importance of financial stability into the spotlight. Canada has learned from the experience of other countries that systematic risk can arise from all parts of the financial sector, not just the banking sector. Obviously that includes the capital markets. Yet one thing has not changed: Canada remains the only industrialized country without a national securities regulator.
From labour to business, from left to right, from small to large investors, we have heard the same refrain. This irregularity exclusive to Canada is now, more than ever, no longer acceptable.
Listen to the Small Investor Protection Association, which states, “We don't have a national system of protecting investors....we think it's important that all Canadians should have the same amount of protection. And that can only be done through a national organization”.
Listen to the recent Montreal Gazette editorial, which states, “It's absurd, in the era of unprecedented anxiety about all things financial, that 13 different agencies, one in each province and territory, regulate the trading of stocks and bonds and the like in Canada”.
Listen to the Canadian Bankers Association, which states, “We have been debating securities regulation in Canada for decades: enough is enough....the debate is over, it’s time to get this done”.
Listen to the National Union of Public and General Employees, which states, “Canada is the only member of the Group of Seven industrialized nations without a national securities watchdog. It has a dismal reputation at home and abroad in dealing with corporate crimes and wrongdoing”.
Listen to Michael Code, a securities professor at the University of Toronto, Faculty of Law, who has said, “If there was a time when the need for a national securities regulator cries out, it's now”.
Our Conservative government has listened to these voices and we are taking concrete action in response.
We are taking an important first step toward a new regulatory regime by introducing legislation based on recommendations of the aforementioned expert panel. That panel, chaired by the Hon. Tom Hockin, conducted an extensive and open consultation process, publicly seeking and inviting submissions. From that process, recommendations were developed on the best way forward to improve securities regulation in Canada. I encourage all to take the time to read this important report. It is reachable at expertpanel.ca.
There is good reason why we must urgently take action on this front. We all recognize that Canada has a strong financial services sector, one that spans the country from coast to coast to coast, providing good, high paying jobs for Canadians. Indeed, our financial system has been judged as the soundest in the world by the World Economic Forum. However, we have a capital markets regulatory system that can and must be improved.
This is why we plan to introduce a new securities act that will provide for greater investor voice in policy-making, better and more coordinated enforcement and the creation of an independent tribunal. Most important, the act would also give a financial stability mandate to the Canadian securities regulator.
As I stated earlier, financial stability is a key factor in setting up such a regulatory body. The proposed regulator will be integrated into Canada's financial stability framework, a framework that includes the Minister of Finance, the Bank of Canada, the Office of the Superintendent of Financial Institutions, the Canada Deposit Insurance Corporation and the Financial Consumer Agency of Canada.
Giving this new regulator a seat at this table will ensure that capital markets will be better represented in Canada's financial stability regime. The role of this framework was amply illustrated in 2008 with the introduction of the Canadian lenders assurance facility, which helps Canadian financial institutions secure access to term funding.
Shortly after the CLAF was created, the federal government agreed to extend its coverage to Caisse centrale Desjardins, a provincially regulated financial institution, after urgent requests by the government of Quebec. This shows the ability and promise of a national body to secure financial stability in a collective fashion that does not intrude on provincial rights.
In the words of Quebec's minister of finance, Monique Jérôme-Forget, it spoke to “the intangible benefits that can be realized when the governments work together with a common purpose to support the Canadian financial sector”.
Indeed, working together, we can build on the rudimentary steps toward an improved securities regulation through the passport system.
For a quick refresher, in 2004 provinces and territories, except for Ontario, admitting to the flaws of the current regime, agreed to create a passport-style system to regulate securities. While the passport system slightly narrowed the regulatory differences and streamlined security laws, and this was a first step, it was recognized that it did not go far enough or even fast enough.
With the passport system, we still have 13 regulators, with 13 sets of laws and 13 sets of fees. We still lack a national co-ordination of enforcement of activities.
In the words of the Canadian Bankers Association, the passport system is only a second best solution. The current fragmented regulatory system remains in place, entrenching a potentially confusing and inefficient enforcement mechanism.
Clearly the passport system is not where Canada needs to be in today's global economy. As we move forward on these next steps, we are confident that a majority of provinces and territories will join us as willing partners to explore this vital initiative.
I point out that this is just one of a series of steps that we are taking to strengthen Canada's financial system and we hope to continue the good work beyond our own borders. The global financial crisis has shown that regulation is a shared responsibility between the countries and we must continue to eliminate barriers for this common purpose.
I thank the House for the opportunity to speak to this item today as the member for Burlington. I have a tremendous number of financial services located within my riding. It is an important issue which has been brought to my attention by people who live in my riding and by the businesses in my riding. In fact, it was part of a discussion I had last week with the local chamber of commerce. It is looking for a common regulatory body. We are looking for a common securities commission, and I look forward to seeing that happen.
