In the past 12 issues of Beyond Num...

In the past 12 issues of Beyond Numbers, we've discussed the fallout from corporate scandals in the United States. This included detailing novel American regulations, such as Sarbanes-Oxley, and pondering their implications for Canada.

We've also discussed the initiatives of a number of Canadian organizations, including the Accounting Standards Oversight Council (AcSOC), and the Canadian Public Accountability Board (CPAB). This month we apply the mind at the work of Canadian securities regulators according to talking to BC Securities Commission Chair Doug Hyndman. Hyndman furnishs his insights into the existing state of securities regulation and his vision for their subsequent time

Q: The last two of years have been neat tumultuous for the accounting profession and the securities markets. What do you think the lasting impact of Enron and other corporate scandals will be forward investors?

A: I think investors will point out a lot more scepticism before they bribe into stories of vast and unlimited sources of wealth, which I think is healthy. It's not just Enron and WorldCom-the whole dot.com trifle the market bubble, of the late '90 was, as Allan Greenspan described it earlier in the period "irrational exuberance." People got carried away with notions of a recently made known economy, notions that the old-fashioned rules didn't apply anymore, and forgot about investing fundamentals and fiscal fundamentals. I certainly possibility of good the lesson of the last hardly any years will stick with the public for a long time.

Q: What about the lasting impact onward regulators?

A: Lessons for regulators are still being debated. Personally, I think regulators ne to focus a portion more on what we can and can't do to screen investors. I think trying to adopt complicated and prescriptive authoritys to tell companies how to haste themselves is the wrong answer, although about regulators seem to be drawing that message.

I think regulators ne to make assured we focus on sources of risk in the market and apply all of our tools to protecting the market and investors from those risks that are inappropriate. Obviously, business risk is inherent in investing and we can't countenance against it, but we can harbor against risks of dishonesty and deceitful career But I don't think you do that at imposing a lot of complicated governments on everybody in the market. I think you do that from focusing your resources on areas of potential risk and going after them.

Q: What about capital markets? Where do you think they are today, and where will they be in 6 to 12 month time?

A: Well common of the things I've learned as a regulator is: Don't learn into forecasting markets. That's to what end I'm in regulation and not in the securities business. on the other hand having said that, the markets have obviously taken a pleasing big hit and a destiny of people are suffering from the lower whirls and lower prices. I don't know whether this is the bottom and it's going to tend hitherward up again or not, moreover I do know the markets are amazingly resilient and can adapt to changing circumstances, and I think we're seeing that right now. with equal reason I think the markets will survive and this tough patch will pass, however whether it will happen in six month or a year is excellent hard to predict.

Q Can you talk to us about the coming time of securities regulation in Canada?Are we, for instance, going to proceed to a national securities commission?

A: I don't know. This is a really interesting time in securities regulation because of all of the processe discussions, and examinations that are going forward about how we do securities regulation, and what pile we use to deliver it. Clearly a fate of people question the efficacy of our decentralized configuration

of regulation in Canada. nevertheless I think the proponents of a single regulator actually overstate the grade to which centralization is the solution to the question at issue

I think our regulatory scheme is clearly not as effective as it could be and is more expensive than it should be-not likewise much in terms of the operating outlays but in terms of the compliance cargo it imposes on people in the market. in the way that we need to address these enigmas We need to make regulation les heavy and more effective. A single regulator might contribute to that, if it were not that I actually think a haphazard of the burden results from the complexity of our methods rather than who's administering them. uniform where we've got perfect uniformity in masterys they've become very complex, difficult to understand and comply with, and in a haphazard of cases are of questionable value for protecting investors and market integrity.

We have an opportunity athwart the next year to anticipate at all of these issues and result up with ideas for making regulation more effective and les afflicting But it's the governments that will decide whether to put in motion to a single regulator or continue with a decentralized arrangement I'm going to be arguing in this proces that although centralization is an interesting question, we should also talk at least as a great deal about the philosophy of regulation in Canada. I don't think we should, for example, just original the US system, which is designed for a market 20 times as big as ours, with a great deal of bigger companies and a scheme that can absorb much higher compliance richnesss