On September 19, 2013, the federal Canadian government and the
provincial governments of British Columbia and Ontario announced an
Agreement in Principle to establish a "cooperative capital
markets regulatory system" (the Cooperative System) and
invited other provinces and territories to participate. This
announcement follows the federal government's proposal for the
creation of a national securities regulator by way of negotiated
agreement with the provinces and territories in the March 2013
Federal Budget (see our previous Blakes Bulletin found
The Agreement reflects the 2011 decision of the Supreme Court of
Canada that the federal government's previously proposed
legislation establishing a national securities regulator was
unconstitutional, as falling outside federal jurisdiction (see our
previous Blakes Bulletin found
here). The Agreement provides that each jurisdiction is acting
within its constitutional jurisdiction and is not surrendering its
own jurisdiction over the matters in the Agreement.
The Agreement contemplates one single regulator would administer
provincial and federal legislation under authority delegated by
each participating jurisdiction.
Among the stated purposes of the Cooperative System are the
facilitation of capital raising through more integrated markets on
the basis of national standards reflected in cooperatively
developed regulations consistently applied, the strengthening of
Canada's capacity to manage systemic risk and enabling Canada
to play a more influential role in international capital market
As set out in the Agreement, some of the key features of the
proposed Cooperative System are:
A combination of both provincial and federal legislation
Uniform provincial legislation regarding regulation of
securities markets would be adopted by each participating
Federal legislation would address criminal matters and matters
related to systemic risk
The common regulator would have an executive head office in
The regulator would be administered by an expert board of
directors overseen by a council of Ministers, with each
participating jurisdiction represented
The council of Ministers would have authority for approving
Local offices in all participating jurisdictions would be
Self-funded through a single, simplified fee structure
The Agreement seeks to reassure provinces and territories that
the capacity to weigh and consider local perspectives would be
maintained. It appears that this reassurance was not enough for
Quebec as its Finance Minister publicly rejected the invitation to
join the Cooperative System on the day it was announced and the
Quebec Intergovernmental Affairs Minister has signalled that the
province may oppose the initiative in court.
With the enactment of legislation by each participating
jurisdiction proposed to be completed by the end of 2014, the
"cooperative capital markets regulator" is expected to be
operational in the participating jurisdictions by July 1, 2015.
With the apparent opposition of at least some of the provinces
which have significant capital markets, it is not clear whether the
proposed Cooperative System will assist, or in fact detract from,
national harmonization of Canadian securities regulation.
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