Canada: New Cooperative Capital Markets Regulator: How It Works (And Some Unresolved Issues)

On September 8, 2014, the Canadian government and the British Columbia, Ontario, Saskatchewan and New Brunswick governments entered into a memorandum of agreement (Agreement) formalizing the terms and conditions of the cooperative capital markets regulatory system (Cooperative System). For more information on this please see our September 2014 Blakes Bulletin: Cooperative Capital Markets Regulatory System Agreement and Draft Legislation Released. Consultation drafts of the uniform provincial capital markets legislation (Provincial Capital Markets Act (PCMA)) and complementary federal legislation (Capital Markets Stability Act (CMSA)) that are proposed for enactment were also released for public comment (Consultation Drafts).

Given the scope of the new proposed legislation at both the federal and provincial levels, Blakes is publishing a series of bulletins regarding various aspects of the proposed Cooperative System. This bulletin addresses the proposed structure and inter-provincial cooperation framework of the Cooperative System.


The Agreement reflects the Supreme Court of Canada's 2011 decision 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.

On October 9, 2014, the Prince Edward Island government signed the Agreement, joining the Canadian government and the British Columbia, Ontario, Saskatchewan and New Brunswick governments as participating jurisdictions (Participating Jurisdictions) under the Agreement.


The PCMA, which will be proposed for enactment by each participating province and territory, addresses matters of provincial or territorial jurisdiction in the regulation of capital markets and would replace existing Securities Acts in each of the participating provinces. The complementary federal CMSA addresses systemic risk in national capital markets, national data collection and criminal law matters. Both the PCMA and CMSA empower the Capital Markets Regulatory Authority (Authority) to administer the PCMAs of all of the Participating Jurisdictions and the federal CMSA, and to make regulations for carrying out the purposes of the legislation.

One significant difference from current legislation is the extent to which the PCMA takes a "platform approach" to capital markets regulation by setting out the fundamental provisions of capital markets law while leaving detailed requirements to be addressed in regulations. Certain provisions that are currently contained in provincial securities legislation have been omitted from the draft PCMA, presumably to be included in the regulations enacted by the Authority. This approach continues and accelerates the trend to delegate the development of securities legislation in the form of regulations to be enacted by the regulator as opposed to being contained in legislation passed by provincial legislatures. According to commentary released by the Government of Canada in connection with the Agreement, this approach is designed to promote regulatory flexibility, allowing the Authority to respond to market developments in a timely manner and appropriately tailor its regulatory treatment of various entities and activities.

The CMSA includes regulation-making authority in respect of national data collection and addressing systemic risk related to capital markets. Under the PCMA, however, the specific matters for regulation-making by the Authority are not provided for under the draft PCMA. The commentary states they will be developed in conjunction with the draft regulations. It is not clear why this important aspect of the Cooperative System is not addressed in the draft PCMA in respect of which comments are sought.

The process for making regulations (beyond the initial set of regulations) under the PCMA and CMSA is similar to that currently used by the Canadian Securities Administrators, and includes requirements for publication of proposals, mandatory notice and comment periods, and oversight by the Council of Ministers (Council), which is given authority to accept or reject regulations and is deemed to approve regulations if it does not respond within a specified period.

Under the Agreement, the Participating Jurisdictions have agreed to use their best efforts to publish draft regulations – which would replace all existing national securities administrator rules in the participating provinces – for public comment by December 19, 2014 and enact the PCMA and CMSA by June 30, 2015.


The Agreement sets out the principal components of the Cooperative System, including the PCMA, CMSA, Authority, Council, offices and fee structure. The Agreement contemplates that the Participating Jurisdictions will agree on legislation and other constating charter documents (collectively, CMRA Charter Documentation) that will set out the structure, responsibilities and powers of the Authority. CMRA Charter Documentation has not been released for comment.

Pursuant to the Agreement, the Authority will be a jointly established and operationally independent common regulator for the Cooperative System.

The Authority will be supervised by a board of directors (Board) composed of a minimum of nine and a maximum of 12 directors. The Board will be responsible for, among other things, supervising the management of the business and affairs of the Authority, appointing the chief regulator and exercising the Authority's power to make regulations.

The members of the Board will be appointed by the Council based on recommendations from a nominating committee. The Council will be composed of a minister from each of the Participating Jurisdictions and the minister of finance of Canada. In addition to appointing the members of the Board, the Council will be responsible for, among other things, proposing amendments to the Cooperative System legislation and approving regulations made by the Board.

The term "independent," which is used in the Agreement in respect of the Authority and the Board, as well as the Tribunal and nominating committees as described below, is not defined in the Agreement or the draft CMSA or PCMA. Presumably the definition of "independence" for these purposes will be set out in the CMRA Charter Documentation.


The Authority will have two principal divisions: a regulatory division and an adjudicative division.

The regulatory division will be responsible for the policy, regulatory operations, advisory services and enforcement functions of the Authority. The regulatory division will be led by the chief regulator who will serve as chief executive officer responsible for management of the business and affairs of the regulatory division. The regulatory division will have deputy chief regulators based in each of British Columbia and Ontario, as well as Alberta and Quebec in the event that they choose to participate in the Cooperative System. There will also be two regional deputy chief regulators to represent other Participating Jurisdictions initially based in Saskatchewan and New Brunswick. The chief regulator will be responsible for recommending the deputy chief regulators to the Board for approval. The regulatory division will also have an executive committee that will include the chief regulator and the deputy chief regulators. The executive committee will serve as the primary executive decision-making body for the regulatory division.

The adjudicative division will consist of an independent tribunal (Tribunal) led by the chief adjudicator and composed of independent adjudicators who will be appointed by the Council on the recommendation of a nominating committee. The Tribunal will operate independently of the regulatory division and will hold hearings across Canada.


The nominating committees for the Board and the Tribunal will be composed of (a) one member selected by each of the ministers from a major capital markets jurisdiction (Ontario, British Columbia and, if applicable, Alberta and Quebec) and the minister of finance of Canada, and an equal number of members selected by the Board (in the case of the nominating committee for the Board) or the Tribunal (in the case of the nominating committee for the Tribunal) from among its members, and (b) one member selected by the provincial and territorial Participating Jurisdictions that are not major capital markets jurisdictions (or, if there are more than five provincial and territorial Participating Jurisdictions that are not major capital markets jurisdictions, two members). Under the Agreement, the members of a nominating committee must be independent of the governments represented by the Council and possess appropriate qualifications and capital markets-related experience.


The Authority will have a regulatory office located in every participating province. Each regulatory office will be managed by a director who will be responsible for coordinating the delivery of regulatory functions that are responsive to the needs of local market participants and investors, and ensuring the deputy chief regulator responsible for the jurisdiction is aware of local issues for consideration in the development and application of policy.

The Authority will have an effective executive head office in Toronto. The chief regulator will be located in the executive head office along with a sufficient number of the executive management team and executive corporate staff to permit the executive head office to carry out its purposes.


The Authority will be funded through a single, simplified fee structure designed to allow for self-funding of the Authority. The fee structure is not set out in the draft CMSA or PCMA and presumably will be set out in the regulations. It will be interesting to see whether the fees currently paid by market participants such as reporting issuers and registrants will need to be increased to address the additional responsibilities of the Authority for national data collection, enforcement and addressing systematic risk, and the overlay of the Council, the Board and deputy chief regulators on the existing provincial securities commission structure. As well, it will be interesting to see how the fee structure addresses companies that are currently reporting issuers or registrants in less than all of the Participating Jurisdictions. The Government of Canada has also agreed to make payments to Participating Jurisdictions that will lose net revenue as a result of the transition to the Cooperative System.


The Agreement provides that the Authority will use its best efforts to negotiate and implement an interface mechanism with each non-participating jurisdiction such that the Cooperative System contemplated by the Agreement is, effectively, of national application. The CMSA also provides that the Authority, in fulfilling its mandate, must coordinate to the extent practicable its regulatory activities with those of other federal, provincial and foreign financial authorities so as to promote efficient capital markets, achieve effective regulation and avoid imposing an undue regulatory burden. Aside from certain provisions relating to enforcement and Council decision-making processes, there are no additional provisions in the Agreement or Consultation Drafts relating to the manner in which the Authority will co-operate with non-participating jurisdictions.

As well, the Consultation Drafts do not appear to address important transitional issues, such as how existing reporting issuers or registrants in one or more of the Participating Jurisdictions will become reporting issuers or registrants under the new legislation, or whether existing reporting issuers or registrants in less than all of the Participating Jurisdictions will become reporting issuers under all of the Participating Jurisdictions under the new legislation.


Comments on the Consultation Drafts may be submitted until November 7, 2014. Given the breadth of these two significant pieces of legislation, one at the federal level with many novel provisions and one at the provincial level that will replace existing securities legislation and provide the legal framework for all securities regulation in the four provinces, this appears to be an ambitious deadline for comments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
23 Nov 2018, Other, Toronto, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

28 Nov 2018, Speaking Engagement, Toronto, Canada

Arbitration has a number of advantages and some disadvantages for the resolution of domestic and international commercial disputes.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions