Canada wants to attract and mobilize significantly more investments. But businesses and investors still pay for capital markets regulation through a fragmented system of provincial, territorial, and self-regulatory fees that treats Canada’s national capital markets as a collection of local ones.

The Canadian Forum for Financial Markets’ paper Fees and Fragmentation-Lowering the Price of Capital Markets Regulation in Canada recommends that Canada’s system of regulatory fees be reformed as part of Canada’s drive for a “one Canadian economy”, which includes the elimination of interprovincial barriers and increased domestic and foreign investment.

Canada has 13 provincial and territorial securities regulators as well as the Canadian Investment Regulatory Organization, which operates as a national self-regulatory organization. All of these regulators levy fees on market participants.  The result is a patchwork of charges based largely on individual regulatory structures and priorities rather than a coherent national approach to the fees that are charged to issuers and intermediaries for the benefit of accessing Canada’s capital markets.

This paper identifies overlapping and duplicative fees, inconsistent approaches to cost recovery, and a system of decentralized accountability as resulting in unnecessary costs for market participants, which are ultimately borne on Canadian investors.  These deficiencies contribute to the fragmentation of Canada’s capital markets and negatively impact the attractiveness of Canada’s markets from a global perspective.

The problems associated with Canada’s fee regime could be addressed through a national regulator.  In the absence of those reforms, the CFFiM calls on Canada’s policymakers to establish a simplified and consolidated fee schedule at a net reduction for market participants.  Substantive reform of Canada’s fee regime is needed to allow businesses to expand, to enhance consumer choice, and to promote open, efficient, and competitive capital markets in Canada.