The Ministers of Finance of British Columbia, Ontario and Canada
have agreed to establish a cooperative capital markets regulatory
system and have invited all provinces and territories to
participate in the cooperative system.
Establishing a Cooperative System
The cooperative system will have a single capital markets
regulator (the "CMR") administering provincial and
federal legislation and a single set of regulations designed to
protect investors, support efficient capital markets and manage
systemic risk. The CMR will be responsible for policy development
and regulation-making, regulatory operations, enforcement and will
have a separate and independent adjudicative tribunal.
Key elements of the cooperative system include:
A uniform Act adopted by each participating province and
territory covering all areas that provincial securities legislation
A complementary federal Act that will address criminal matters
and matters relating to systemic risk in national capital markets
and national data collection.
The CMR will administer both the provincial and federal Acts
under authority delegated by each participating jurisdiction.
A single, simplified fee structure will be designed to allow
the self-funding of the CMR and will not impose unnecessary or
disproportionate costs on market participants.
The federal government will provide transitional funding to
those provinces and territories that will lose net revenue as a
result of transitioning to the cooperative system.
The CMR will have an executive head office located in Toronto
and a regulatory office in every participating province.
The New Federal Legislation
The new federal Act will be "platform" in nature.
Rather than containing detailed provisions, the federal legislation
will delegate to the CMR authority to:
make regulations of national application (including in
non-participating jurisdictions) related to systemic risk in
national capital markets and national data collection;
make orders regarding practices determined by the CMR to give
rise to systemic risk in national capital markets; and
exercise national emergency powers related to systemic risk in
national capital markets and national data collection.
The CMR's regulation-making authority regarding systemic
risk would for example include the authority to gather information
to identify and monitor warning signs of emerging systemic risks to
the financial system originating in the national capital markets.
The federal legislation would delegate to the CMR national
emergency powers in the event of a financial crisis to address an
imminent threat to the stability of the national capital
Details of the criminal aspects of the new federal legislation
have not yet been disclosed.
The implementation of the cooperative system is expected to
occur in several phases, and the federal and participating
provincial governments have agreed to use their best efforts to
achieve the following timeline:
By January 31, 2014, the execution of a Memorandum of Agreement
by each of the participating jurisdictions setting out the terms
and conditions of the cooperative system (to which draft
cooperative legislation will be attached).
By March 31, 2014, the publication of the initial draft
regulations of the cooperative legislation for public comment.
On or before May 30, 2014, the execution of an agreement by
each of the participating jurisdictions setting out the terms and
conditions for the integration of their securities regulatory body
into the CMR (which may differ as between participating
jurisdictions to accommodate their distinctive circumstances).
By December 31, 2014, the enactment of provincial legislation
by each provincial participating jurisdiction and the enactment of
the complementary federal legislation by Parliament.
Based on this timeline, the federal and provincial governments
expect the CMR to be operational by July 1, 2015.
Not a 14th Regulator
This cooperative approach wards off any criticism that the
federal government's initiative would do little more than add a
14th securities regulator to an already over-burdened regulatory
system. It also reflects a change in the government strategy from
one involving bi-lateral negotiations province by province to one
that can best be summarized as "if we build it, they will
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