The Council of Ministers of the jurisdictions participating in
the development of the Cooperative Capital Markets Regulatory
System (CCMR) announced last week on April 16, 2015
important developments toward the reform of Canada's capital
markets regulatory regime. In a largely symbolic move, Yukon
executed the Memorandum of Agreement Regarding the Cooperative
Capital Markets Regulatory System, and joins the
governments of Canada, Ontario, British Columbia, Saskatchewan and
New Brunswick in this largely provincially-led initiative. The
Memorandum of Agreement was amended to accommodate the addition of
the Canadian territories to the Cooperative system, and now
provides for the maintenance of an office of the Capital Markets
Regulatory Authority (the "Authority") in each territory.
In addition, the Ministers announced the appointment of members of
the nominating committee that will recommend candidates for the
initial board of directors of the Authority, and indicated that the
complete draft legislative regime – including draft initial
regulations – will be made available for comment in the
summer of 2015. These developments follow the submission of more
than 60 comment letters from interested parties on the Memorandum
of Agreement itself and on the two pieces of draft consultation
legislation that CCMR released on September 8, 2014, namely, the
provincial Capital Markets Act and the federal Capital
Markets Stability Act.
The goal of the CCMR is to eliminate the inefficiencies that are
endemic to Canada's current system of 13 separate securities
agencies. The CCMR reflects the federal government's response
to the 2011 Supreme Court of Canada decision in Reference Re Securities Act, 2011 SCC
66, which held that the federal government's first attempt
to enact federal legislation to establish a national securities
regulator was unconstitutional. As a result, rather than being
pursued as a federal initiative, the provinces have largely taken
the lead with the support of the federal government. To date, the
provinces that have signed on to the CCMR represent approximately
three-quarters of Canadian listed companies, with a market
capitalization of almost 53%. However, staunch opposition to the
Cooperative System remains, as Quebec and Alberta have continued to
propose their own provincially-based models for securities
On September 8, 2014, the Ministers released consultation drafts
of uniform provincial and territorial capital markets legislation
(the Capital Markets Act) and complementary federal
legislation (the Capital Markets Stability Act), though
regulations have yet to be released. As the participating
jurisdictions describe, the purpose of the provincial and
territorial legislation is to modernize and harmonize existing
provincial and territorial securities legislation (as opposed to 13
divergent legislative regimes), while the complementary federal
legislation empowers the Authority to collect data and address
capital markets-related systemic risk on a national basis.
Osler was among the law firms to provide comment on the draft
legislation. In our comment letter, we applauded the efforts
of the CCMR, including the proposed approach to selecting the
Authority's board of directors through a nominating committee.
In addition, we encouraged the participating jurisdictions to
reconsider any changes to the status quo that were not necessary to
achieve harmonization among the participating jurisdictions, and to
provide as much clarity and engagement as possible through the
Significantly, Osler and other stakeholders also urged the
participating jurisdictions to provide an additional comment period
on the two pieces of legislation once the detailed proposed
regulations have been released, so that the entire regime can be
considered and evaluated as a whole. The participating
jurisdictions responded to this request by announcing that they
intend to release during the summer of 2015 updated consultation
draft provincial and federal capital markets legislation, together
with draft initial regulations, for public comment over a 120-day
The announcement of a professional-class Board nominating
committee signals significant momentum for the Cooperative
regulator initiative. The impending release of advanced draft
legislation – together with detailed regulations – this
summer further suggests that a harmonized securities regulatory
regime is closer to being a reality than ever before. Market
participants are best advised to continue to keep current on these
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