Securities Regulation in British Columbia
The British Columbia Securities Commission regulates the conduct of market participants, including:
- Issuers that raise capital through security offerings, and their directors and officers
- Securities firms, their directors and officers, and their employees registered to advise and trade in securities
We carry out our operating activities in the ways described below:
- We set disclosure and conduct standards for market participants such as registered securities firms and publicly-traded companies.
- We register firms and individuals who sell securities in the province.
- We monitor the conduct of market participants for compliance with the regulatory requirements. We educate market participants about their regulatory obligations. We choose from a wide range of remedies when we find non-compliance.
- We investigate complaints, and gather information, to identify abusive market conduct.
- We take decisive enforcement action against those responsible when warranted by serious cases of misconduct.
- We educate investors about financial matters and how to protect themselves against fraud and other abusive market practices.
The goals that guide our operations in the areas of compliance, enforcement, policy, and education are described in our Service Plans.
Our stakeholders have diverse yet interdependent interests, both provincial and national in scope. We consult them in various ways to understand their needs and interests, and we communicate with them to explain our requirements, expectations, and plans.
- The public – which relies on us to foster capital markets that contribute to the economic well being of British Columbia
- Investors – both retail and institutional, who seek to invest their savings in fair and efficient securities markets
- Issuers – public and private companies that rely on the capital markets to fund growth and diversification
- Securities firms – registered to provide investment services to both users and suppliers of capital (investors)
- The provincial government – to which we are accountable
- Other Canadian regulators – with which we develop and implement joint policy, technology, and education initiatives through the Canadian Securities Administrators (CSA)
While our rules apply to all securities firms, we monitor directly only those firms registered as portfolio managers, exchange contract dealers, and scholarship plan dealers (representing approximately 60% of registered firms and 10% of the individuals registered in BC). Under powers provided in the Securities Act, we rely on self-regulatory organizations (SROs) to perform key regulatory functions related to investment dealer and mutual fund dealer firms. We oversee these organizations in cooperation with our regulatory colleagues in other jurisdictions. These SRO organizations are:
- The Mutual Fund Dealers Association of Canada (MFDA) – the self-regulatory organization for mutual fund dealers, which regulates their conduct and capital adequacy.
- The Investment Industry Regulatory Organization of Canada (IIROC) – the self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.
The BCSC shares responsibility for supervising the operations of the TSX Venture Exchange with the Alberta Securities Commission. We have authorized three other exchanges (TSX, NASDAQ, and CNQ) to carry on business in British Columbia, and rely on other jurisdictions to oversee their operations.
The BCSC participates in Canada’s national system of securities regulation through the Canadian Securities Administrators (CSA). Through executive and staff committees, the CSA seek to avoid duplication and streamline the regulatory process by collaborating on compliance and enforcement activities, rule-making, and education programs.
The CSA has worked with governments to develop a passport system for securities regulation. The the passport system gives each market participant access to the capital markets in participating jurisdictions by dealing with the regulator and the securities requirements in its home province.
Through CSA, we rely on national systems to collect and disseminate much of the information essential to our operations. These systems are:
The BCSC's Approach to Regulation
We regulate to protect investors and market integrity. Our legal authority and resources equip us with some powerful regulatory tools. We can:
- Impose requirements through rules and other regulatory instruments
- Provide guidance
- Monitor compliance and demand corrective action
- Take enforcement action
- Educate market participants and investors
Regulation inevitably imposes costs through regulatory fees, compliance costs, and restrictions on business activity. Investors ultimately pay these costs. We aim to design our regulatory interventions so they generate the greatest investor protection and market integrity benefits for the least cost.
To obtain maximum value from our legal authority and resources, we focus them on significant investor and market integrity threats.
We regulate by setting the standards market participants must achieve and by reinforcing the standards through other regulatory tools – guidance, compliance, enforcement, and education. We regulate in a way that requires industry to focus on meeting the standards, not just the prescriptive requirements. Sometimes we can engage industry in designing acceptable solutions without new regulation. Regulating in this way gives more flexibility to industry and puts the responsibility to comply where it belongs, with issuers’ and securities firms’ senior management and directors.
The BCSC uses a problem-solving methodology to identify and analyze market risks. We then respond using the most effective regulatory tools in a way that is calculated to achieve measurable results.