The governments of Canada, Ontario and British Columbia have
reached an agreement in principle to establish a cooperative
capital markets regulatory system. The joint announcement outlined
the participating governments' view that the new cooperative
regulate Canadian capital markets in a manner that will foster
more efficient and globally competitive capital markets,
provide increased protection for investors,
strengthen Canada's capacity to identify and manage
systemic risk, and
enable Canada, through the single voice of a new cooperative
capital markets regulator, to play a more empowered and influential
role in international capital market regulatory initiatives.
Proposals to replace the current system of 13 different
provincial and territorial securities regulators with an integrated
single regulator have long been debated in Canada, which stands
virtually alone among developed nations in not having a single
national securities regulator. In 2010, the federal government, a
consistent supporter of a coordinated regulatory system, proposed a
single national securities regulator and a unified and
comprehensive Canadian Securities Act. The proposed Act
ultimately was ruled unconstitutional by the Supreme Court but the
Court left open certain opportunities for a single regulator,
particularly noting that a cooperative approach was available to
Parliament and the provinces.
The agreement in principle is carefully constructed to address
the considerations from the Supreme Court decision, contemplating a
cooperative system under which:
a single regulator would be appointed cooperatively by the
participating jurisdictions (as opposed to a national (federal)
each participating jurisdiction would remain responsible for
addressing matters within its constitutional jurisdiction, and
neither surrender nor impair any of its jurisdiction;
instead of national legislation, each participating
jurisdiction would adopt uniform legislation addressing those areas
of securities regulation currently addressed by the provinces (with
a complementary federal statute enacted to address criminal matters
and matters of systemic risk); and
securities laws would be administered by the single cooperative
capital markets regulator, which would be overseen by a Council of
Ministers comprised of the Ministers responsible for capital
markets regulation in each of the participating jurisdictions and
the federal Minister of Finance.
Regional Roles and Responsibility
The agreement in principle provides that there would be a
nationally integrated executive management team and regulatory
offices located in every participating province, with an executive
head office in Toronto. The proposed structure would have the
regulatory offices continuing to provide the range of services that
the provincial commissions provide today with day-today
decision-making power guided by the common interpretations and
The organization, design and culture of the new regulator would
be guided by principles that include, among others, that regional
and market sector perspectives should be weighed and considered in
major policy and operational decisions by including regionally
based staff in developing policy approaches and operating
priorities and processes - a move that is intended to win at least
some support in other jurisdictions. The announcement also included
a pledge by the federal government to provide transitional funding
for provinces to compensate them for revenue lost from the fees
charged by their securities regulators, to address provincial
concerns about giving up a revenue source.
Under the agreement in principle legislation is to be published
for comment by early next year. The legislation is intended to be
enacted by December 31, 2014. The cooperative regulator is proposed
to be operational by July 1, 2015.
The governments of British Columbia and Ontario are initially
charged with bringing the agreement in principle to the other
provinces and territories and, together with the federal Minister
of Finance, will use their best efforts to secure their
participation. However, other jurisdictions (particularly Quebec
and Alberta) have historically been adamantly opposed to the
creation of a single regulator, so it remains to be seen what
support the proposed cooperative system will get in those other
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