News Release
Legislative model shows how streamlined and simplified securities regulation can work
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Date:
2003-04-15 -
Number:
2003/29
Vancouver – The British Columbia Securities Commission’s draft legislation for new securities regulation, released today, shows how securities laws that are streamlined and simplified can strengthen investor protection while reducing the burden imposed on business.
The “BC Model” for new securities regulation is the result of 18 months of intensive review and analysis of existing securities regulation in British Columbia. It reflects the contributions of over 1,700 market participants across Canada who took part in townhall meetings or focus groups, sent in some 70 comment letters, and provided data for a cost-benefit analysis involving senior and junior issuers. The BCSC is offering it as a model for securities regulation in Canada.
The four-volume publication contains draft legislation, commentary, a guide for issuers, and a guide for dealers and advisers. Together these provide a concrete illustration of how streamlined and simplified regulation can work.
“Canada needs a system of securities regulation that protects investors and market integrity and supports a dynamic and competitive market,” said BCSC Chair Doug Hyndman. “Unfortunately, securities regulation in Canada has grown so complex and unwieldy that both these objectives are threatened.”
Principles-based regulation is the backbone of the BC Model. Principles-based regulation makes market participants focus on what is right for investors, clients and markets, and discourages the hunt for loopholes. It also offers market participants the opportunity to reduce their costs, and the flexibility to tailor their compliance systems to their own business models.
This principles-based model is backed up by new investor remedies and enforcement powers. For example:
· A new right of action that gives investors and clients the right to sue market participants for any material contravention of the legislation
· Enforcement against those who misuse the public’s trust is strengthened by:
o increasing regulatory power to obtain information
o broadening the commission’s power to ban participants from the market
o giving the commission the power to order the repayment of ill-gotten gains
o increasing penalties and fines
· The draft legislation is written in plain language so that anyone with a reasonable knowledge of their own industry can understand how securities regulation applies to them.
· It also imposes a duty on market participants to use plain language so that their disclosure will be meaningful to investors seeking information.
The draft legislation also refines three core proposals introduced last year:
1. Continuous Market Access, which offers improved disclosure to investors and better access to markets by issuers.
2. Code of Conduct, which imposes broad requirements on registered dealers and advisers to ensure that clients are treated fairly, served competently, and told all the important facts about fees and conflicts of interest.
3. Firm-only Registration, designed to hold dealers and advisers accountable for the activities of their representatives, while reducing their costs and giving them more flexibility.
The BC Model proposes to replace the existing BC Securities Act, rules and policies. Following a national consultation this spring, it will be finalized for comprehensive review by government. The Commission will deliver a final version to the British Columbia government at the end of this year, thereby meeting its commitment to streamline and simplify securities regulation in the province.
The BC Model can be reviewed online at www.bcsc.bc.ca/bcproposals
The British Columbia Securities Commission is the independent provincial government agency responsible for regulating trading in securities. The BCSC reports to the Ministry of Competition, Science and Enterprise.
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