ASC set to chart new course
Strategic plan focuses on getting it right in an increasingly complicated environment
Under its new leadership, the Alberta Securities Commission is moving in a new direction, for the first time publishing a threeyear strategic plan.
It is a bit ironic, given the ASC oversees capital formation in Alberta. A company without its own strategic plan would have no chance of going public or raising money.
Chairman Stan Magidson, now seven months into the job, says the ASC’s members are big proponents of the rigour demanded by strategic planning. It therefore makes sense to map out where the organization wants to go over the next three years.
A big question, given the continued push to establish a national regulator, is whether it really matters whether the ASC has a three-year plan? The answer is yes, and no. Yes, because if a new national regulator becomes a reality, it won’t happen overnight.
And no, because if a court case brought by the governments of Quebec and Manitoba challenging the constitutional validity of a national regulator succeeds it could quash efforts now underway.
Alberta is making sure it has optionality — defining its own course while keeping an eye on the long game, in terms of what’s happening across the country and in capital markets around the world.
Magidson is very clear — as when he accepted the job — that Alberta is on the side of maintaining its independence as a regulatory jurisdiction and doesn’t see the need to be part of a national framework.
Some of that harkens back to the oft-mentioned reasoning that the energy sector, and its methods for raising capital, are unique and could be compromised by a national regulator.
Magidson, along with others in town, believe the level of co-operation that already exists within the Canadian Securities Administrators — where each provincial regulatory authority is represented — and the existing “passport” system of mutual reliance between jurisdictions, has effectively established a national regulatory framework.
“I believe we have created an optimal model for securities regulation … every jurisdiction goes into those CSA meetings, which ultimately inform national policy, but with a local and regional influence,” he said Monday.
The concerns are similar across the country.
The mandate of every securities regulator is to ensure capital formation and investor protection. How they do this continues to evolve with dramatic changes to the financial world, including development of new financial instruments, trading platforms, the burgeoning Fintech segment or protections against cyberterrorism.
Two pieces of the ASC’s strategic plan bear special mention — the provision to create a whistleblower portal and the acknowledgment that new regulation needs to provide for emerging areas such as climate change disclosure.
In January 2016, the Financial Standards Board chaired by Bank of England governor Mark Carney established a Task Force on Climate-Related Financial Disclosure, for which the comment period closed Sunday.
Including this in the strategic plan ensures Canada is not faced with having to take another country’s or regulatory body’s prescription for disclosure.
“There are numerous international initiatives that are seeking to develop frameworks globally and among all of these, we are seeing huge divergence in views,” Magidson said. “The most important thing is that we here in Canada should come up with an approach that will have issuers providing the proper calibration of disclosure so investors have what they need, but also doing that in a way that isn’t going to impose a burden on issuers that will put up a barrier that prevent future growth and prosperity.
“We should not simply be a taker of global trends and development. It is one area that Alberta has a lot to contribute to the conversation.”
One piece missing from the plan is an affirmation of the ASC’s commitment to ‘comply or explain,’ aimed at increasing the number of women serving as directors of companies or as members of executive leadership teams.
In as much as climate change is an issue under scrutiny from the perspective of understanding investment risk, the same holds true with respect to gender diversity around the boardroom table.
A study released last fall by the law firm Osler Hoskin & Harcourt showed the oilpatch lags all other sectors in terms of the number of women around its collective boardroom table with only 10 per cent serving as directors.
Magidson defended the omission, saying the ASC had committed to the policy last September and that the intent was to table something that was forward looking.
Fair enough, but it can be argued that when the primary sector overseen by the ASC is still not where it needs to be, setting goals to attain a better balance within executive ranks and boardrooms is forward looking.
Looking at all the issues on a broad level, it’s clear the threeyear plan is all about striving for intelligent regulation that allows capital markets to thrive. And that holds across the spectrum, whether in the context of dealing with derivatives, climate change disclosure, cybersecurity, Fintech and yes, diversity in the C-suite and around the boardroom table.
Too much or too little regulation and it all goes pear-shaped. The challenge, as with anything, is striking the right balance.
We should not simply be a taker of global trends and development. It is one area that Alberta has a lot to contribute …