The federal government has pressed ahead with its objective of
establishing a national securities regulator under a voluntary
regime that enables provinces and territories to opt in by choice.
In late May of this year, the proposed Securities Act (Canada) was
unveiled by the Finance Minister, and in mid-July, the Canadian
Securities Transition Office (CSTO) delivered its key planning
document entitled Transition Plan for Canadian Securities
The proposed Canadian Securities Act was created with
input from the CSTO and the 10 participating provinces and
territories (non-participants are Québec, Alberta and
Manitoba). It harmonizes existing legislation, reflects domestic
and international best practice, and proposes improvements in a
number of areas — including corporate governance,
adjudication, and regulatory and criminal enforcement, among
The proposed act was not introduced into Parliament as a bill.
Rather, in an effort to obtain some legal certainty, the federal
government referred it to the Supreme Court of Canada, concurrent
with its release, for the court's opinion on the following
question: "Is the annexed proposed Canadian Securities
Act within the legislative authority of the Parliament of
Canada?" This federal constitutional reference case is
expected to take anywhere between 10 and 24 months, and a hearing
is scheduled for April 2011. The Provinces of Alberta and
Québec continue their strong opposition to a national
securities regulator, and each has initiated their own
constitutional references in their respective courts of appeal.
Both hearings are expected to take place in early 2011.
The Transition Plan for Canadian Securities Regulatory
Authority was released in mid-July of this year by the CSTO,
the principal organization leading and managing the transition to a
Canadian securities regulator. It is the CSTO's roadmap for
establishing the Canadian Securities Regulatory Authority (CSRA),
the regulatory body established under the proposed act. The
Transition Plan sets out the CSTO's vision for the
CSRA and its regulatory approach, as well as proposals for the
governance structure, organization design and implementation. There
has been much speculation about the possible location of the
CSRA's head office. Without committing to any specific plan,
Doug Hyndman, Chair and CEO of the CSTO, has recently been active
in the press with his view that the location of the CSRA's
Chief Regulator should not matter as the goal is the creation of a
single and final decision- and policy-maker on securities matters.
Mr. Hyndman has made the point that in Canada — with its
diverse local economies and market conditions —
centralizing regulation in just one place would be "throwing
the baby out with the bath water."
The Transition Plan anticipates the launch of the CSRA
by July 2012. The next phase of the transition will require deeper
involvement of the participating provinces and territories, as well
as continued input from stakeholders. In the coming months,
participating provinces and territories will be required to enter
into various agreements indicating their actual commitment to
proceed with the CSRA. However, the looming showdown in two courts
of appeal and the Supreme Court of Canada over the constitutional
power of the federal government to put in place a national
securities regulator is likely to dominate the headlines in first
half of 2011 — and ultimately, the CSTO's next
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