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
December 2011 Blakes Bulletin: Supreme Court Finds Against National
Securities Regulator). 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 that one single regulator
would administer provincial and federal legislation under authority
delegated by each participating jurisdiction.
The Agreement includes certain key changes from the original
agreement in principle including:
The addition of two deputy chief regulators to accommodate the
participation of smaller jurisdictions: one representing
Saskatchewan, Manitoba, the Northwest Territories, Nunavut and the
Yukon, and another representing New Brunswick, Nova Scotia, Prince
Edward Island, and Newfoundland and Labrador (to the extent they
are participating jurisdictions). These would be in addition to
deputy chief regulators representing each of British Columbia,
Ontario, Alberta and Quebec (to the extent they are participating
jurisdictions). The additional deputy chief regulators will
initially be located in Saskatchewan and New Brunswick and will
serve a term of five years.
The nominating committees for the expert board of directors and
independent adjudicative tribunal will include representation from
both major and other participating jurisdictions.
Fundamental changes to the Cooperative System will require
unanimous approval of the Council of Ministers during the initial
three-year period after the Cooperative System commences operations
and, thereafter, will require approval of at least two-thirds of
the Council of Ministers, the minister from each major capital
markets jurisdiction and the Minister of Finance of
A transition plan will be developed to integrate existing
securities regulatory entities into the Cooperative System.
Each regulatory office (one of which will be located in each
province) will be managed by a director who will coordinate the
delivery of regulatory functions to local market participants and
investors and will ensure that the deputy chief regulator is aware
of local interests in the development and application of national
The regulator will consider requests from a participating
jurisdiction to accommodate provincial economic development
initiatives and will approve the requests provided they do not
adversely affect the fundamental principles of the Cooperative
System, affect market participants in other jurisdictions or
involve other matters of national importance.
The federal government also entered into transition funding
agreements with the Saskatchewan and New Brunswick governments.
Under the Agreement, the parties have agreed to use their best
efforts to publish the initial draft of the cooperative federal and
provincial legislation for public comment by December 19, 2014,
enact such legislation by June 30, 2015, and have the Cooperative
System operational in the fall of 2015.
The federal Finance Minister described the Agreement as a
"major step towards a single regulator." However, six
provinces (Alberta, Manitoba, Quebec, Nova Scotia, Prince Edward
Island, and Newfoundland and Labrador) and all three territories
have not agreed to the Cooperative System. The major capital
markets of Alberta and Quebec, in particular, remain strongly
opposed to the Cooperative System, with the Alberta Finance
Minister stating that "This will leave Canada with a more
fractured system than the one we have today. We do not believe that
four provinces constitute a critical mass of support for a change
of this magnitude."
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