Market Regulation: Securities Laws and Authorities:
Regulatory System
Single Set of Regulations
Position: Jurisdictions should have one set of regulations that cover all trading activities.
Rationale: A uniform set of regulations eliminates inconsistencies in regulations for similar activities.
Where stated: CAC - CSA Concept Proposal for Uniform Securities Legislation (PDF)
Single Regulator
Position: Markets should have a single, unified securities regulator with jurisdiction in all political subdivisions.
Rationale: A single regulator would eliminate regulatory arbitrage and confusion, reduce costs for issuers and market participants, reduce the likelihood of inconsistent enforcement and oversight, and make regulations less burdensome and complex.
Where stated: CAC - 5-Yr Review; CAC - CSA Concept Proposal for Uniform Securities Legislation (PDF)
Goals of Regulation
Position: All market regulation, including self regulation, should:
- Promote transparency of price data
- Promote transparency of relevant issuer information
- Be designed and enforced to maintain and enhance market credibility, openness, and investor confidence
- Ensure a level playing field in trade execution for all market participants
Rationale: These goals will foster efficient capital markets by permitting investors to make well-informed decisions and provide issuers with lower capital costs. Self regulation encourages participants to “buy-in” to the purpose and meaning of the regulation.
Where stated: CAC - CSA Concept Proposal for Uniform Securities Legislation (PDF)
Market Regulatory Model
Position: The ideal model for a securities regulatory system would promote financial markets that are:
- Liquid and efficient
- Transparent and fair
- Ethical and sound
Rationale: Such a system permits unhindered capital flows that allocate capital on the basis of underlying risks and expected returns; provides reliable and relevant information in a timely and fair-handed manner to all market participants; and encourages market participants to act with integrity and in accordance with principles of unassailable conduct as they make capital transactions and other related activities.
Where stated: Bowman on Single Regulator; CAC - Wise Person's Committee
Elements of Effective Regulation
Position: Key elements for an effective regulatory system include:
- Underlying principles for regulation and enforcement that are consistent for similar transactions and activities
- Regulators who possess the requisite experience and in-depth knowledge of capital markets and the roles and activities of market participants
- A market system with sufficient flexibility to respond rapidly to changes
- A central market system with sufficient regional representation to ensure sensitivity to emerging niche markets and small-and-medium-sized businesses
- A system that is cost-effective in terms of fees, compliance costs, and other burdens imposed on registrants, issuers, and investors
- Adequate governance to assure objectivity, appropriate independence, and accountability to the government
Rationale: These elements seek qualified and fair-minded regulators that oversee markets that can react and evolve in ways that enhance investor interests.
Where stated: Bowman on Single Regulator
Exchange Regulation
Position: Securities regulators should not require particular operating structures for exchanges, including mandating automatic execution for any market.
Rationale: This should remain the decision of the individual market center, based on competitive, financial, and operational factors.
Where stated: U.S. SEC Reg NMS Original (PDF)
Funding for Accounting Regulators
Position: Agencies established to oversee the accounting industry should receive their funding through compulsory levies on those companies that issue securities and the accounting firms that audit these companies.
Rationale: Dependency on funding from the industry and professionals regulated can impair an oversight entity’s ability to operate effectively as a governing body and overseer of accounting firms.
Where stated: USAC Audit SC - Audit Oversight