Canada's Investment Managers Call on Ottawa to Immediately End Constitutional Quagmire by Establishing "Opt-In" Federal

TORONTO, ONTARIO, Jul 31 (MARKET WIRE) --
The Investment Counsel Association of Canada ("ICAC"), the voice of the
country's portfolio managers and investment counsellors, today urged the
federal government to establish a federal regulator using an "opt-in"
solution that would overcome perpetual political and legal wrangling that
has left investors at risk.

In a submission to the Expert Panel on Securities Regulation, the ICAC
suggested the federal government should use its power to create a
separate national regulatory system that would enable securities issuers
and registrants to be registered with and subject to the jurisdiction of
a federal regulator. Such a system would then exclude provincial
jurisdiction over those participants who opt-in.

"Canadian investors cannot wait any longer for the creation of a single
national regulator," said Katie Walmsley, ICAC President, "so we're
calling on the federal government to make bold, transformational change.
The opt-in solution that we're proposing would provide national
consistency in regulation, enhanced enforcement, lower regulatory costs -
and could still address regional sensitivities - but would not require
federal/provincial agreement. Therefore it could be employed very
rapidly. It's the perfect solution to Canada's constitutional quagmire
that is short changing investors, public companies and our national
economy."

The ICAC has long advocated the need for a national securities' regulator
and has participated actively in promoting the concept. While the
organization - which represents Canadian investment management firms with
over $700 billion of assets under administration - would prefer to see a
national regulator created as a result of federal/provincial
collaboration, it feels the country can no longer wait for governments to
solve their differences.

"After suffering through a plethora of task forces and reviews on this
important subject by the federal government, the provinces, industry
groups and many registrants and issuers, we are no where closer to single
securities regulator," said Barb Lockhart, ICAC's Chair and SVP Finance
and Administration of McLean Budden Ltd. "It's time for Plan B and our
opt-in model offers some very clear advantages. While we recognize there
will be political resistance to our solution, the benefits far outweigh
the costs."

"OPT-IN" MODEL

ICAC's submission focused on eight key advantages to the Opt-In model.
These include:

Quickest Way Forward/Least Transitional Risk

In its submission, the ICAC noted that many of the transitional risks
associated with any major transformational change to securities
regulation could be minimized with the "opt-in" approach. If a federal
regime was established, issuers, registrants and provinces could opt in
to the new regulator relatively seamlessly. The risk of further delay in
making transformational change to securities regulation by requiring most
or all provinces to be on board with a new approach could be avoided. The
ICAC noted in its submission that in moving forward with a single
regulator, "Canada is not breaking new ground. Virtually all other
developed nations have already reached an accord."

Consistency in Regulation

The submission also highlighted that a single federal structure would
provide market stakeholders with a single securities legislation
framework. This framework would be clear, balanced between core and
flexible principles and contain the appropriate mix of more detailed
rules. The ICAC noted that the merits of uniform and consistent
legislation outweigh the perceived value, the practical costs and burden
posed on stakeholders from today's divergent regulatory landscape.

Enhanced Enforcement

The submission described an enforcement structure featuring local
enforcement offices that would report into a nationally coordinated
enforcement body. This enhanced enforcement model would apply consistent
rules and penalties nation-wide. This would lead to shorter lag times
between investigations and formal enforcement proceedings or negotiated
settlements. The submission also articulated the need for the federal
government to strengthen some of its regulating tools to assist the new
regulator in enforcing the rules and creating the appropriate deterrent
impact on market participants. The submission suggested this may require
the federal Department of Finance to work with the Justice Department to
bolster sections of the Criminal Code pertaining to securities
violations, particularly those dealing with disclosure, misrepresentation
and fraud.

Cultivation of Economic Growth

The new federal securities agency, with its single set of rules and
filings and one-stop approach to new and existing issuers and registrants
alike, would, in ICAC's opinion, positively assist in the cultivation of
new business and stimulate Canada's economy for the betterment of all.
Canadians, regardless of what province or territory they reside in, would
be able to access new share issues rather than the case today where this
might not always be possible if a prospectus was not cleared through an
individual province/territory. Just as every Canadian should be entitled
to certain standards in healthcare and public safety, they should have an
equal and national access to the securities markets regardless of where
they live.

Flexibility to Respond to Future Evolution of Global Markets

A key point in ICAC's submission is that Canada is a small marketplace,
representing just three percent of the current global marketplace. Given
the country's relative size, it is imperative that "we maintain our
flexibility to adapt with change and to initiate regulation on new
developments with greater speed than we have to date. The practical
reality is that one regulator is able to respond and adapt to change more
quickly than 13 securities regulators. "There are many examples where
Canadian regulation and/or enforcement has arrived well after similar
activity occurred in the U.S., the UK and continental Europe and other
markets such as Australia."

Reduction in Costs

As many previous studies on securities regulation in Canada have noted, a
single set of rules and filings and one-stop approach will reduce costs
on market participants with the benefits passed onto investors.

Strengthened Influence of Canada in International Markets

The submission noted that a new federal securities agency would be able
to act as a strong voice for Canada on associations such as the
International Organization of Securities Commissions (IOSCO). If the
Canadian market was represented by one voice internationally, it would
rank right after the US, UK, France and China. Walmsley noted, "it is an
international embarrassment that we, along with Boznia & Herzegovina, are
the only other member of IOSCO that is not regulated by a federal
regulator."

Ability to Address Regional Sensitivities

The ICAC's submission noted that through the formation of regional
branches with specialized areas of expertise, local/provincial
sensitivities could be addressed through the opt-in national regulatory
regime. "For example, matters pertaining to oil and gas could tap into
the skills of Western regional offices, while Eastern regional offices
could deal with financial or manufacturing issues."

About ICAC (www.investmentcounsel.org)

The Investment Counsel Association of Canada (ICAC) is the representative
organization for investment counsel and portfolio managers in Canada. Our
members are from across Canada and are comprised of both large investment
management firms managing Canadian's pensions and retirement savings.
ICAC was established in 1952 and its current members are responsible for
managing in excess of over $700 billion of client assets. The overall
mission of the Association is to advocate the highest standards of
unbiased portfolio management in the interest of investors served by
Members. Member firms are only in the business of managing investments
for clients in keeping with each client's needs, objectives and risk.

ICAC Submission:

A copy of the ICAC submission to the Expert Panel on Securities
Regulation is available at
http://www.investmentcounsel.org/news_submissions_govt.asp

Contacts:
Investment Counsel Association of Canada
Katie Walmsley
President
(416) 504-7018
Email: kwalmsley@investmentcounsel.org

Investment Counsel Association of Canada
Toronto, Ontario
(416) 504-1118
Email: kwalmsley@investmentcounsel.org
Website: www.investmentcounsel.org

McLean Budden Ltd.
Barb Lockhart
Chairman
(416) 361-2277

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