Re: Consultation of Canadian Capital Markets Community regarding securities regulation in Canada

The Toronto Board of Trade is pleased to respond to your consultation of the Canadian Capital Markets Community regarding securities regulation in Canada. We have attached for your consideration, our letter of December 11, 2002, to Ontario Finance Minister, the Hon. Janet Ecker, M.P.P., and Ontario Securities Commission Chair, David Brown, on this issue.

As indicated in our letter to the Finance Minister and OSC Chair, the Toronto Board of Trade supports an integrated national securities regulatory system and believes the "passport" system adopted by member nations of the European Union may serve as a useful model for Canada.

Given that the trend both domestically and internationally is towards greater integration and harmonization, and in light of the urgent need to protect the competitiveness of Canadian capital markets, we believe this initiative is overdue. We urge the federal, provincial and territorial governments to work together in a spirit of co-operation on this important issue.

We would be pleased to elaborate on our comments or address any questions you may have. Please contact Norm Tulsiani of our office at (416) 862-4518 for any questions or comments.

Toronto Board of Trade

December 11, 2002

Hon Janet Ecker, M.P.P.
Minister of Finance
7 Frost Building South, 7th Floor
7 Queen's Park Crescent
Toronto, ON M7A 1Y7

David Brown
Ontario Securities Commission
20 Queen Street West, Suite 1903, Box 55
Toronto, Ontario M5H 3S8

Dear Minister Ecker and Mr. Brown

Re: National Securities Regulation System

We are writing to express The Toronto Board of Trade's support for the creation of a National Securities Regulation System (NSRS). The Board is a business membership association representing approximately 9,000 businesses located in the Greater Toronto Area. Our members include businesses in all sectors, privately-owned or publicly-traded, large and small.

We believe the creation of a NSRS has significant benefits. First, in an era where investors have many options and trading in jurisdictions outside Canada is readily accessible and affordable, Canada must move quickly and decisively to protect the competitiveness of its capital markets and to ensure their continued relevance in the future. In the internet-era, where securities transactions in non-Canadian markets can be quickly and conveniently executed by investors at their office or home, smaller capital markets like Canada must ensure they continue to be attractive to both Canadian and foreign investors. We believe that the cost and complexity of the securities regulatory system in Canada is too high. Differing requirements administered by different regulators in ten provinces and three territories reduces the attractiveness of the Canadian capital markets. A single regulatory system with one set of requirements would address this issue.

The trend both domestically and internationally is towards greater integration and harmonization. For example, last year, the United Kingdom consolidated nine separate financial sector regulators into one central regulator. Ontario is ready to merge the Financial Services Commission of Ontario (FSCO) and the Ontario Securities Commission (OSC).

The European Union (EU) has a head start and has taken measures towards the convergence of the securities regulatory system of member nations. The EU concluded that its securities regulatory system was not working effectively and reform was necessary to ensure future competitiveness. A "Committee of Wise Men" was struck in July 2000 to spear-head this project and issued its final report in February 2001. The EU has adopted a "passport" system under which an issuer that has complied with the regulatory requirements in its home jurisdiction can issue shares in other EU countries without taking additional steps to comply with requirements in the second jurisdiction. The result is that the EU-with different countries, languages, culture and history -has a more streamlined securities regulation system than Canada. As other jurisdictions are moving towards harmonizing securities regulations, Canada must also harmonize Canadian securities law with international securities law. This will be significantly easier if a NSRS is in place.

Given recent developments in the U.S. to boost investor confidence and the fact that many Canadian companies are also listed on U.S.-based exchanges, we believe that a NSRS is a vital component of Canada's securities regulatory reform initiatives. A NSRS will facilitate efforts to harmonize Canadian securities regulation with that of the U.S., wherever appropriate, and will help boost investor confidence in Canadian capital markets.

We understand that certain provinces may have reservations about creating a NSRS because they believe it may impede their ability to respond to regional issues. However, we note that there are many areas where the interests are the same. It is important to note that a NSRS need not create a new federal regulator and that provinces need not cede their legal authority. Since provinces and territories will retain their legal jurisdiction within the context of convergence, we believe that regional issues can be accommodated in a national framework.

The Board believes that the provinces should take the lead with Ottawa's cooperation to create a NSRS, possibly along the lines of the EU's "passport" system. Provinces and territories may have fewer reservations and are more likely to participate if the creation of a NSRS is a provincially-led initiative.

We understand that the federal Department of Finance and the Ontario Ministry of Finance have previously indicated their support for a NSRS. More recently, Harold MacKay, Special Representative to the Deputy Prime Minister & Finance Minister on Securities Regulatory Reform, has indicated in his interim report that the "passport" model may be worth exploring. As the NSRS proposal gains the support of the federal and provincial governments and the business community, we believe the time to act is now. We would be pleased to address any questions or comments you may have to our recommendations and look forward to your response.

Toronto Board of Trade