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This article is part of the Investor Office series of discussions with key figures in Canada’s financial services industry whose work impacts investors. The views expressed in this article are entirely those of Kevan Cowan and are not intended to represent the views of the Investor Office or the Ontario Securities Commission.
Kevan Cowan will be the Chief Regulator of the new Capital Markets Regulatory Authority (CMRA) after it launches in 2018, and is currently Chief Executive Officer of the interim Capital Markets Authority Implementation Organization (CMAIO). The Investor Office recently sat down with Kevan to discuss his background, the CMRA, the work that’s underway and his current priorities.
I was a lawyer at a large Canadian law firm in 1997 when I decided I wanted a change. I wasn’t sure what it would be, but I wanted to try something different. In the spring of that year I saw a job ad for the Toronto Stock Exchange, which was looking for someone to help clean up the over-the-counter market. I remember reading the ad and catching myself already composing my cover letter, which I thought was kind of a neat sign. I showed up at the headhunter’s office the next day without an appointment, and in the end I got the job.
The issue at the time was that there were several firms preying on retail investors and engaging in the sort of behaviour you see in movies like The Wolf of Wall Street. I was tasked with helping clean that up. I prepared a comprehensive set of rules, and while those rules were awaiting approval, changes were announced to the Canadian exchange landscape, including the creation of the Venture Exchange and the specialization of the Toronto and Montreal exchanges. Those changes seemed like fun and interesting opportunities to work on, and so what I thought would be a two year project turned into 16 years working at stock exchanges.
I lived in western Canada as the first non-Calgarian president of the Venture Exchange, with most of the activity there centered between Calgary and Vancouver. I moved to Calgary and embraced the community. After a couple of years, I moved back to Toronto to head the equities group at TMX, which included the Toronto Stock Exchange and TSX Venture Exchange.
On the role of the Chief Regulator…
The CMRA is an extremely important project that is gaining momentum and critical mass. I first remember hearing about this when I was in university and have always been excited about the prospect. I noticed the momentum building when its Board of Directors was announced last summer. I saw this as an opportunity to get involved in and to contribute to something that would really enhance capital markets.
The role of Chief Regulator is interesting because you have to look at it as having two different phases: pre-launch and post-launch of the CMRA.
Pre-launch, my role as CEO of CMAIO is very much about building an organization that will be a common cooperative regulator. We’re looking to build on all the experience and strengths of the current system and put it onto a new platform. The CMRA will enhance and improve capital markets in Canada by enhancing investor protection, streamlining and harmonizing regulation and creating more effective access to capital.
After the CMRA launches in 2018, my role as Chief Regulator will be very much a regulatory role. In addition to continuing as CEO, the role of Chief Regulator requires leadership in regulatory policy development based on the needs and interests of investors, market participants and other stakeholders.
As Chief Regulator, I am accountable to the organization’s Board of Directors, both before and after the new organization launches.
On the CMRA…
The creation of the CMRA presents an historic opportunity for Canada and Canadian capital markets. The CMRA will establish something that has been dreamed about in Canada for a long time: an efficient and effective cooperative capital markets regulator that brings together all of the expertise and strengths of the constituent pieces in a way that is greater than the sum of its parts. There are a lot of opportunities that come from harmonizing regulation in Canada, which is very difficult to do across separate organizations.
There are also opportunities around coordinated enforcement which will be good for investors. Federal criminal and systemic risk jurisdiction will be coming together with provincial securities jurisdiction in a way that allows for much more coordinated enforcement activities, which will help better protect investors.
The way the legislation has been drafted to create the CMRA takes a more flexible approach to capital markets regulation than what currently exists. A lot of the regulation is moved into a rule-making authority that resides within CMRA, and this will allow the organization to quickly respond to developments in the marketplace.
We are going through a time of rapid change in the marketplace, and one of the biggest challenges for capital market regulators is to stay ahead of these changes. For example, technological change – whether it’s fintech, crowdfunding, or something else – is happening rapidly and current regulations have not often been designed with them in mind. The more flexible platform of the CMRA will allow it to be more responsive.
On his current priorities…
Since my appointment was announced in November, I’ve been on a listening tour and going out to talk with as many people as I can. I’m trying to really hear what other people have to say. Along with that, I’m enhancing my existing relationships and forming new ones with people at all the current securities regulatory agencies.
Another big priority is continuing to generate momentum for the CMRA. Public momentum really began in July with the announcement of the new Board of Directors, and now the next step is to build on that. This involves bringing together the work that’s been done to date to get this organization up and running, and accelerating that as we define a critical path forward.
In the near-term, I think you’ll see us gradually become more visible to the public. We are also building a geographically diverse national management team, and you’ll see something around that soon.
On the importance of staff to the success of the CMRA…
The staff of the regulatory authorities joining the CMRA are dedicated, highly skilled and highly respected. They are the backbone of this project, and critical to its success. We cannot do this without them. They’re the ones who carry out the daily regulatory work that we will continue to do. They also have the skills and expertise we need to create an organization that is greater than the sum of its parts. As we go forward, they’re the ones who can identify and realize on the historic opportunities we have to optimize capital markets regulation. Staff are the key players.
As I mentioned, one of my priorities is to meet with people, forge relationships and listen. Meeting with staff of the existing regulators is at the top of my list.
Any final thoughts?
I want to emphasize that I feel very privileged to be a part of all this. Having the opportunity to contribute to something that you have heard about since your university days is a real privilege. I think this is a historic opportunity for Canada; it’s been on the books a long time. We are building momentum, and we are going to make this opportunity a reality.
Read the recent Investor News interview with Bill Black, Chair of the Board of the new Capital Markets Regulatory Authority (CMRA) after it launches in 2018 and currently Chair of the Board of the interim Capital Markets Authority Implementation Organization (CMAIO).