Inefficiency and Path Dependency in Canada's Securities Regulatory System: Towards a Reform Agenda
38 Pages Posted: 2 Nov 2004
Date Written: May 31, 2005
We analyze the claim that Canadian capital markets are inefficient and examine reform proposals in light of this claim. We argue on the basis of empirical evidence that the Canadian securities regime is burdened by four types of cost inefficiencies: lack of harmonization, duplication, opportunity cost risk and uncertainty. We then argue that another type of efficiency - dynamic efficiency - is important in analyses of capital market regulation. We seek an explanation for inefficiencies in the current regime. We argue that the securities regulatory system has resulted from a path dependent legal trajectory that is heavily influenced by federal-provincial tensions over securities regulation as well as the institutions responsible for dispensing regulation.
Keywords: Efficiency, path dependency, passport, convergence, securities regime, Canada
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