In recent months, the multinational regulators—the FSB and the IOSCO—have concluded that systemic risks related to large asset managers flow from their potential system-wide impact on capital markets, not from the particular institution per se. It is likely that Canadian authorities will reach a similar conclusion. This would likely mean removal of large Canadian non-bank non-insurer financial institutions from inclusion in the Capital Market Stability Act (CMSA)—i.e. the federal draft legislation expected to be released imminently that aims to oversee and impose regulations to address systemic risk in national capital markets.
The removal of non-bank non-insurer financial institutions from CMSA regulatory oversight would allay concerns about the prospect of regulatory inefficiencies arising from duplication and overlap. These institutions and their capital market activities are already under the oversight of designated authorities. Oversight by the CMSA would simply add another layer of regulation.
More widespread support for the legislation underpinning the national Cooperative Capital Markets Regulatory System means smooth sailing for the cooperative securities regulator.
My FP Comment, special to the Financial Post, titled Calm Coming Over the National Regulator, is accessible by clicking here.