Inefficiency and Path Dependency in Canada's Securities Regulatory System: Towards a Reform Agenda

Canadian Business Law Journal, Forthcoming

38 Pages Posted: 1 Apr 2005

See all articles by Anita Anand

Anita Anand

University of Toronto - Faculty of Law

Peter Klein

Simon Fraser University (SFU) - Finance Area

Multiple version iconThere are 2 versions of this paper

Abstract

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. Any reform proposal must either intervene in the development of this path dependent trajectory or be conceived on the basis of existing institutions. A single regulatory model is an example of such an intervention but may be less practicable than a "passport" or "principal regulator" system that allows existing provincial regulatory institutions to remain in place.

Keywords: Efficiency, path dependency, convergence, passport, harmonization, regulation

Suggested Citation

Anand, Anita and Klein, Peter Charles, Inefficiency and Path Dependency in Canada's Securities Regulatory System: Towards a Reform Agenda. Canadian Business Law Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=694049

Anita Anand (Contact Author)

University of Toronto - Faculty of Law ( email )

78 Queen's Park
Toronto, Ontario M5S 2C5
Canada
4169464002 (Phone)

Peter Charles Klein

Simon Fraser University (SFU) - Finance Area ( email )

Burnaby, British Columbia V5A 1S6
Canada
604-291-5605 (Phone)

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