11-301 - Canadian Securities Administrators Strategic Plan 1999-2001 [CSA Staff Notice - Rescinded]

The Canadian Securities Administrators ("CSA") are publishing the CSA strategic plan for the period April 1, 1999 to March 31, 2002. The plan, which was approved at the Spring meeting of the CSA, sets out the CSA's strategic direction through seven core strategies and outlines the business objectives, initiatives and success measures which support them.

The plan is being published to provide securities market participants, other regulators and the public with an overview of the strategic objectives and initiatives that will guide the development of the Canadian Securities Regulatory System over the next three years.

For further information, please contact:

David C. Linder
Alberta Securities Commission
(403) 297-4228

Stephen J. Wilson
British Columbia Securities Commission
(604) 899-6500

Nick Pittas
Nova Scotia Securities Commission
(902) 424-7768

Charles F. Macfarlane
Ontario Securities Commission
(416) 593-8208

Jacques Labelle
Commission des valeurs mobilières du Québec
(514) 940-2199

Barbara Shourounis
Saskatchewan Securities Commission
(306) 787-5842

July 2, 1999

Canadian Securities Administrators

Strategic Plan 1999 - 2001

July 1999

Overview

The Canadian Securities Administrators (CSA) is comprised of the thirteen provincial and territorial securities regulatory authorities (SRAs) in Canada. Over several years, the CSA has established and continues to develop and administer the Canadian Securities Regulatory System (CSRS). As an informal body, the CSA functions through meetings of Commission Chairs held at regular intervals, meetings and ad hoc interactions between Executive Directors, and through working Committees, established by the Chairs and reporting to them, on issues of shared concern, matters of import, or initiatives Chairs have decided to pursue jointly. Funding and support resources are drawn from within Commission operating budgets on a voluntary basis.

The SRAs share a mandate of ensuring well-regulated markets which protect investors from unfair, improper or fraudulent practices while fostering fair, efficient capital markets within each of their jurisdictions. All the SRAs: register directly, or indirectly through self-regulatory organizations (SROs), individuals and companies who give advice about or trade in securities or exchange contracts; review prospectuses; monitor continuous disclosure documents; conduct compliance reviews of registrants; grant discretionary exemptions from registration and prospectus requirements; investigate possible violations of provincial securities laws; and commence proceedings before the Commission or applicable Provincial Courts of Justice.

In some jurisdictions, SRAs are self-funding agencies or crown corporations. In others, they operate as agencies of the provincial government under statute. Individual SRAs do some or all of the following: formulate policy; make rules; sit as an administrative tribunal in hearings on securities-related matters; and hear appeals from decisions made by the Executive Director and staff.

Purposeof the CSA

The purpose of the CSA is to give Canada a securities regulatory system that protects investors from unfair, improper or fraudulent practices and fosters fair, efficient and vibrant capital markets of the highest integrity. To that end, the CSA relies upon:

Strategic Goals

The following general goals have guided the CSA in the fulfilment of its purpose. It is proposed that they remain unchanged in the 1999/2001¹ plan period:

^{1April 1, 1999 to March 31, 2002}

• protect investors from fraudulent, abusive, and unfair practices in Canada's securities markets
• foster the development of fair, efficient, dynamic and competitive securities markets that will provide investment opportunities and access to capital for the benefit of Canadians in all regions and sectors
• maintain an efficient, effective, responsive and enforceable regulatory framework that serves and protects market participants in all jurisdictions of Canada and balances national harmonization with regional flexibility
• ensure that Canada participates actively and effectively in international regulatory arrangements and organizations

The primary thrusts in fulfilment of these goals have been largely focused on "harmonizing" approaches to securities regulation and include:

• building investor awareness, knowledge and competence through shared education initiatives
• updating rules and policies for mutual funds
• developing a "single-entry" prospectus and application filing and review system predicated on a functioning and effective mutual reliance system
• jointly supervising national self-regulatory organizations
• developing a "single entry" Canadian registration system based on a high-functioning mutual reliance system
• moving toward a common regulatory approach to electronic and other alternative trading systems (ATSs)
• formulating options and alternatives for a Canadian integrated disclosure system

Progress has been achieved in developing common rules, policies, approaches and systems including the following:

Strategic Considerations and Key Challenges

While the individual plans of the SRAs clearly recognize challenges unique to their jurisdictions or their business development, there is a high level of congruity on the following challenges which need to be recognized and accommodated as the CSA goes forward.

Global Integration of Markets and the Rapid Pace of Technological Change

The business environment is increasingly subject to global influences, where firms are being serviced by integrated banking, insurance and securities conglomerates which operate worldwide. Technology is driving market innovation and facilitating the creation of increasingly more sophisticated financial products, trading techniques and strategies. Competition between markets has increased as services formerly provided locally can now be provided from any remote location -- regulated to Canadian standards or not -- using readily available and inexpensive technology and the Internet. Canadian exchanges are responding aggressively to the need to reorganize in the face of global competition.

Increasing Dominance of the Secondary Market and Rapid Growth of the Market for Investment Funds

Investor participation has increased dramatically in secondary markets. Investor participation in the investment funds sector is at record levels and long-term growth is expected to continue. This growth represents challenges to the abilities of all SRAs to effectively inform and protect market participants. Investors are becoming increasingly active in seeking information and education about investments.

Addressing Gaps in Financial Services Regulation

Relaxation of restrictions on the types of financial products offered by various providers has caused gaps in regulation. The CSA must develop a consistent position addressing the gaps and inequalities in regulation that have resulted from merging marketplaces.

Building a "Canadian Securities Regulatory System", within Available Resources, which Reflects Local Concerns, Priorities and Legislation

Harmonization of regulatory and enforcement activities, with congruous mutual reliance systems, represents a fundamental "foundation" of the CSRS. Nonetheless, such a long-term vision is also largely dependent on finding effective responses to issues such as fee rationalization and harmonization, shared technology, alignment of enforcement and prosecutorial powers, as well as consistent and effective delegation and oversight of appropriate authorities to self-regulatory organizations.

Public Confidence in the Integrity of Canada's Markets

Market participants and investors in all jurisdictions want regulators to provide clear rules, more accessible and user-friendly services, and faster response times. Investors are demanding a greater sense of confidence in the integrity of capital markets. Regulators are being expected to establish and maintain standards which ensure the appropriate training and conduct of investment advisors and other registrants. The quality of investor education, oversight and enforcement activities in all markets must be of a consistent standard and form if Canada is to have fair, efficient and effective markets in all regions and all sectors regulated by the CSA.

Development of Varying Business Structures for the Securities Regulatory Authorities

In light of political decisions beyond the scope of the SRAs, various approaches are being taken to the structures and forms of member Commission operations. Self-funding SRAs share the common challenges of building effective operations managed to a form of "bottom-line" while those not self-funding confront the challenges of resourcing and management inherent in the operations of government agencies. From a CSA perspective, this asymmetrical approach to Commission operations may tend to create a significant gap between the "large" SRAs-- whose activities are wide-ranging and holistic-- and the "small" SRAs, forced by budget constraints to concentrate their resources on specific niches and/or activities. Moreover, harmonization of fee structures and effective contribution to, and sharing of, CSA initiatives becomes increasingly problematic.

A Vision for the Future

In 2001, the CSA and its member SRAs will be, and will be seen by their constituents to be, providing:

CSA Strategies

The "core" CSA strategies for 1999/2001 are:

Operationalizing The Plan - An Overview of Objectives and Initiatives