On September 19, 2013, the Ministers of Finance of British
Columbia, Ontario and Canada announced that they had agreed to
establish a cooperative capital markets regulatory system.
A backgrounder on the agreed elements of a cooperative capital
markets regulatory system, as well as a copy of the agreement in
principle to move towards a cooperative capital markets regulatory
system, are available here.
According to the press release announcing this agreement, the
cooperative securities regulator will better protect investors,
enhance Canada's financial services sector, support efficient
capital markets and manage systemic risk.
The newly agreed to cooperative capital markets regulatory
system will feature a single regulator administering a single set
of regulations and be operationally independent and self-funded
through a single set of fees. It will have an executive head office
in Toronto and a nationally integrated executive management team
and be directed by an expert board of independent directors with
broad capital markets-related expertise. A Council of Ministers of
all participating jurisdictions will oversee the cooperative
The establishment of a cooperative capital markets regulatory
system supported by the Federal government does not come as a
complete surprise. Indeed, Mr. Flaherty has been trying to
establish a national regulator almost from the first day he became
finance minister. For all intents and purposes, the last federal
budget made the creation of a national securities regulator
In his March 2013 budget, Mr. Flaherty specifically indicated
his intention to propose legislation to carry out the
Government's responsibilities for capital markets, consistent
with the decision rendered by the Supreme Court of Canada in 2011
(which ruled that Ottawa's attempts to create a single federal
regulator infringed on some provincial constitutional
responsibilities), if a timely agreement could not be reached with
provinces and territories on a common securities regulator.
Not surprisingly, the Ministers of Finance of British Columbia,
Ontario and Canada invite all provinces and territories to
participate in the proposed system.
Now that two provincial ministers and the federal minister have
agreed to move towards the creation of a cooperative capital
markets regulatory system, will other provinces and territories
(including Quebec and Alberta) decide to participate?
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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