This week Premier Ed Stelmach said that Alberta is not interested in moving towards a national securities regulator. His government supports the current regime and the improvements that are being made to coordinate efforts amongst Canada’s 13 regulators (Yes, 13).

At Steadyhand, this is very discouraging news. Given its economic importance in our confederation, Alberta could be very influential in moving Finance Minister Flaherty’s initiative ahead.

Having just started a new mutual fund company, we have plenty of first-hand experience as to why 13 jurisdictions are burdensome and expensive. We plan to write more fully on this topic at a later date, but let me give you a flavour for what our reality is like.

• We are building a national firm and brand, but initially Steadyhand will only sell direct in five provinces. We cannot justify going beyond the Ontario border given the added costs we would incur (fees from each province, legal costs and other stuff).
• We support the efforts being made to streamline the process and coordinate each province’s requirements, but we still have to pay fees in every province we’re dealing with. I’m including fees we pay for company registration and licensing as well as fees for licensing each of our client service people (Chris, Scott and I all are duly licensed and pay fees in 5 jurisdictions).
• Under the heading of suppression of terrorism, we must file a variety of different reports every month. Our trustee (Canada Western Trust) requires that I sign a form related to the Federal Government’s initiatives. That’s in addition to provincial filings that vary across provinces – Ontario requires specific representations related to Iran and Korea and other provinces don’t … yet. Needless to say, we have considered adding one more application form on our website specifically designed for terrorists.
• To be licensed as a mutual fund dealer (so we can offer our funds directly to investors), we had to apply for membership with the Mutual Fund Dealers Association (MFDA) and also get licensed with the securities commission in each province we wanted to be operate in. While the MFDA is our industry’s self-regulating organization (SRO), the reins have not been fully turned over to it yet. This translates into more fees, larger legal bills and a whole bunch more forms to sign (sometimes I feel like McLean Stevenson in M.A.S.H. when Radar put papers in front of him to sign).
• Further to that, when we applied for an exemption to a certain rule in the MFDA’s book, we had 6 different bodies weighing in with their opinion. As a result, we had questions coming at us from all angles and we found that none of the 6 had exactly the same philosophy on dealer issues. Needless to say, the process has dragged on and cost us a fair bit in legal costs. We applied for the exemption in hopes of lowering the cost to the investor, but so far it’s had the opposite effect.

I know there are benefits to having a local regulator. B.C. is our home regulator and they have been terrific to deal with. If we had to email or call Toronto and talk to someone who’d never heard of us, we’d be frustrated no doubt. But I don’t think the benefits of having 13 regulators outweigh the negatives.

For a country that needs to exercise every advantage it can to compete in the global economy, we have to get past the provincial political agendas and develop a best-of-class regulatory environment.