By Tom Bradley

It was announced yesterday that Saskatchewan and New Brunswick have joined Ontario and British Columbia in committing to a Federal securities regulator, currently (and hopefully temporarily) named the Cooperative Capital Markets Regulatory System.

Why do we need a national regulator? Quite simply, the world is a hyper-competitive place and little Canada can’t afford to grind down companies and investors needlessly with fees, complexity and paperwork. We live in a progressive, sophisticated country and should have one of the best, most effective regulatory systems in the world.

I don’t deny there are benefits to having a local regulator (we felt it when we started up in 2006/07), but local love doesn’t come close to offsetting an overall lack of speed and efficiency. It’s hard enough for governments and regulators to keep up with the pace of change (think of the CRTC’s challenges with Netflix, YouTube, mobile, etc.), without having to operate in a structure that’s rooted in the dark ages.

In the fund area, the multi-jurisdictional structure is clearly getting in the way of much needed reform. At a time when the securities commissions need be decisive and timely, they’re in a constant state of consensus building. The leaders for change not only have to fight the industry’s desperate defense of the status quo, but they also face the challenge of getting their fellow regulators on side every step of the way (it’s a reminder of how lucky I am being the President of a tight, nimble firm).

To make this topic more real, let me use Steadyhand as a case study. Currently, we register our companies, funds and people in five provinces (B.C to Ontario) and we pay fees for each. We’re not registered in the other eight jurisdictions (although we’ve had many enquiries) because the math just doesn’t work. Even if we take the long view, which we do consistently in running our company, the potential revenues don’t come close to offsetting the cost of registration.

If the Cooperative gets up and running in its current form (i.e. four provinces), we’d be happy to deal with 3 regulators instead of five. We’d be able to offer our funds in more provinces (New Brunswick), and hopefully if more come on board, we’d also add the Territories and rest of the Maritimes to the list.

Personally, I think the only two provinces that can feasibly operate outside the Federal regulator are Alberta and Quebec. Any other province that goes it alone risks being marginalized and not included in new securities and fund offerings (it won’t only be Steadyhand Funds that aren’t available in the smaller provinces).

Over time, I hope the pressure will build and at least Alberta will join the Cooperative. I’m pretty sure I won’t see Quebec come into the fold in my lifetime.

I know there’s been a lot of spin around the addition of two small provinces, and lots of negativity, but I think yesterday’s announcement is very positive. The sooner we get the Cooperative up and running the better. We shouldn’t get too exercised about Alberta and Quebec abstinence because one regulator covering the other eleven would be awesome.

On that note, I hope the other seven provinces and territories join the Cooperative soon so they can play a role in shaping this new entity.