In an era where global capital flows with unprecedented speed and volume, Canada’s corporate securities framework is beginning to show concerning signs of age. While we’ve long prided ourselves on having robust financial markets that punch above our economic weight, a troubling reality is emerging: our regulatory environment is increasingly out of step with international standards, potentially putting Canadian businesses at a disadvantage in the global race for investment.
The problem isn’t that Canada lacks sophisticated financial infrastructure—we certainly have that in abundance. Rather, it’s that our regulatory evolution has slowed to a crawl while our competitors sprint ahead. This regulatory stagnation comes at precisely the wrong moment, as borderless digital finance reshapes how capital is raised and deployed worldwide.
“The Canadian securities regulatory framework was once considered a gold standard,” explains Martin Lalonde, a corporate finance specialist I spoke with last week. “But we’ve seen minimal substantial reform over the past decade, while jurisdictions like the UK, Singapore, and even the U.S. have implemented significant modernizations.”
This regulatory inertia manifests in several problematic ways. The continued provincial patchwork of securities regulation—despite decades of discussion about national harmonization—creates unnecessary complexity for companies seeking to raise capital across Canada. The “passport system” was meant to streamline this process, but it remains a half-measure that falls short of the regulatory clarity offered by centralized systems in competitor nations.
More troubling is our increasingly outdated approach to emerging investment mechanisms. While other jurisdictions have developed thoughtful regulatory frameworks for cryptocurrency offerings, tokenized securities, and other blockchain-based financial innovations, Canada’s approach has been largely reactive and piecemeal. This creates uncertainty that drives innovative financial firms to domicile elsewhere.
The numbers tell a concerning story. A recent analysis from the C.D. Howe Institute found that initial public offerings in Canada have declined by nearly 40% over the past decade, while private equity and venture capital increasingly bypass Canadian public markets in favor of more flexible jurisdictions. When promising Canadian startups reach growth stage, they increasingly look to foreign exchanges and investors who operate in more nimble regulatory environments.
To be clear, this isn’t an argument for deregulation. Robust investor protections remain essential to market integrity. But there’s a growing consensus among market participants that Canada can maintain these protections while still modernizing its approach. The challenge is finding the political will to prioritize these changes.
“Canadian securities regulation operates on what I’d call a ‘crisis-response cycle,'” notes Samantha Chen, a corporate governance researcher at Queen’s University. “We make meaningful reforms primarily after market failures or scandals, rather than proactively adapting to changing global standards.”
This reactive approach puts Canadian businesses at a disadvantage in the increasingly competitive global arena. While our CO24 Trends coverage has documented Canada’s strengths in sectors like clean technology, artificial intelligence, and advanced manufacturing, these growing industries require efficient access to capital to scale globally. Our current regulatory environment may be undermining these advantages.
The path forward isn’t mysterious. We need to revitalize efforts toward a national securities regulator with the flexibility to adapt quickly to evolving market conditions. We should study regulatory innovations from jurisdictions like Singapore and the UK that have successfully balanced investor protection with regulatory efficiency. And most urgently, we need to develop comprehensive frameworks for emerging financial technologies rather than addressing them through enforcement actions.
These reforms aren’t merely technical adjustments of interest only to Bay Street insiders. They directly impact Canada’s economic competitiveness, job creation, and ability to retain homegrown innovation. As we’ve explored in previous CO24 Opinions pieces, Canada’s prosperity increasingly depends on our ability to build globally competitive companies—and that requires globally competitive capital markets.
The good news is that Canada still has tremendous strengths to build upon. Our financial institutions remain among the world’s most stable. Our market oversight has generally been effective at preventing major scandals. And our talent pool in financial services remains world-class. But these advantages won’t sustain us if our regulatory framework continues to calcify while the world moves forward.
As the global economy navigates uncertain waters—from inflation concerns to geopolitical tensions—countries with efficient, clear regulatory frameworks will attract disproportionate investment. The question isn’t whether Canada needs securities regulatory reform, but whether we’ll find the political and institutional will to prioritize it before our competitive position erodes further.
For Canadian businesses, investors, and ultimately all citizens who benefit from a prosperous economy, the stakes couldn’t be higher. Our CO24 Culture section often examines how Canadians reconcile tradition with innovation—perhaps it’s time we applied this same critical lens to our approach to securities regulation.
