Canada: Supreme Court Finds Against National Securities Regulator

Copyright 2011, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Litigation & Dispute Resolution, December 2011

The Supreme Court of Canada has rendered a unanimous decision that the proposed Canada Securities Act (the Proposed Act) is not constitutional. In doing so, the Court has defeated the federal government's initiative to establish a single national securities regulator.

The decision comes in response to a reference directed by the Government of Canada on the question of whether the Proposed Act was constitutional. Arguments on the reference were heard earlier this year, as were two similar references directed by the provinces of Quebec and Alberta to their respective appellate courts. Previous Blakes Bulletins on those proceedings can be found here and here, while a bulletin on the Proposed Act itself can be found here.

Key Issues Before the Court

The reference turned on whether the federal government was authorized to regulate securities pursuant to its power over matters of "trade and commerce". This question raised two overarching issues. First, did the "nature" of trading in securities bring it within the scope of the "trade and commerce" power? And second, what would be the constitutional implications of recognizing such a federal power?

Nature of "Trading in Securities"

A series of Supreme Court precedents has established that the test for whether a given matter will fall within the federal "trade and commerce" power will depend, in essence, on whether that matter is of a "general" nature, such that it cannot be adequately regulated at the provincial level – regulation of competition is one example of such a matter. Accordingly, the first major issue before the Supreme Court in the reference on the Proposed Act was whether the regulation of securities involves simply the regulation of a series of purchase and sale contracts pertaining to property – in which case, it would fall solely within the provincial power over "property and civil rights" – or whether it also has a broader aspect that properly brings it within the concurrent jurisdiction of the federal government.

Constitutional Precedent Created

Over the course of the reference hearings, it became clear that the justices of the Supreme Court were also very mindful of the broader constitutional precedent they would be creating by recognizing federal power over securities.

On the one hand, as pointed out by proponents of the Proposed Act, recognizing a concurrent federal jurisdiction over the regulation of securities would have no immediate impact on the long-recognized provincial power over securities regulation, nor over the legitimacy of the provincial Securities Acts. This point was underscored by the fact that the Proposed Act expressly contemplates a voluntary opt-in scheme by which provinces would be given the choice of whether to opt-in to the proposed federal regulator or to retain their provincial regimes.

However, once recognized, a federal power over securities regulation could apply to empower the federal government not only with respect to the Proposed Act but with respect to future legislation as well, including any future legislation compelling the provinces to comply with a federal regime at the expense of their provincial legislation. As such, by recognizing a concurrent federal jurisdiction, the Supreme Court would be potentially opening the door to significant reorientation of the division of powers. It was these concerns that led to sharp opposition to the federal government's reference on the part of some of the provinces.

The Decision

The Supreme Court's unanimous decision was premised on its finding that the "main thrust" of the Proposed Act, which it found to be the "day-to-day" regulation of securities, was not qualitatively different from the regulation already undertaken at the provincial level. On that basis, the Court found that the Proposed Act did not contemplate a distinct matter of genuinely national or general scope as would be required for it to fall within the ambit of the "trade and commerce" power. Echoing the concerns expressed by many of the justices at the reference hearings, the Court found that interpreting "trade and commerce" so broadly as to encompass matters of day-to-day regulation of securities contracts would deny the provinces their proper authority over "property and civil rights", and as such, would upset the balance of federalism.

Notably, the Supreme Court did recognize that certain aspects of securities regulation would likely fall within federal jurisdiction. In particular, the federal government would likely have the authority to regulate aspects of securities bearing upon systemic risk and the preservation of capital markets stability. However, the Court found that regulating these aspects did not require also regulating the "day-to-day" aspects of securities regulation that was the focus of the Proposed Act. Therefore, the Proposed Act could not be saved by the aspects of securities regulation falling within federal jurisdiction.

Where do we go from here?

The Supreme Court's decision, and the lack of any dissent or disagreement amongst the Court, constitutes a serious, if not fatal, blow to the prospect of comprehensive federal regulation of securities in Canada.

That said, while the Supreme Court's decision likely spells the end of the federal government's current effort to create a comprehensive national regulatory regime, it is possible that a more targeted federal effort could yet be successful, and the national Transition Office established by the federal government as part of its initiative will no doubt be reviewing the Court's decision closely. As noted, the Court has indicated that the federal government has authority over some of the more systemic aspects of securities regulation, and it may be possible that a narrower federal initiative to regulate those aspects, possibly premised on the consent and co-operation of some or all of the provinces, could yet be pursued. Notably, the Court made a point of stating in its decision that such a co-operative effort would be constitutionally legitimate.

Nonetheless, taken overall, it appears more certain than ever that Canada's patchwork of provincial securities regulations is here to stay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
27 Oct 2016, Seminar, Toronto, Canada

Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.

1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.