Canada: The Expert Panel On Securities Regulation Delivers Final Report

Last Updated: February 3 2009
Article by Heather Zordel

Final Report And Draft Legislation Released

In February 2008, the Government of Canada established a third-party Expert Panel on Securities Regulation charged with providing the federal Minister of Finance and the provincial and territorial ministers responsible for securities regulation with advice and recommendations on the best way forward to improve securities regulation in Canada. The Expert Panel released its Final Report and Recommendations on January 12, 2009; along with a draft national Securities Act.

The central theme of the Expert Panel's report is that Canada needs a single securities regulatory authority with a strong, decentralized structure that would promote the strengths of the current system while addressing its shortcomings. The Expert Panel recommends adoption of a comprehensive national securities act and a national regulatory system administered by a new Canadian Securities Commission (CSC). The report and draft Securities Act are accompanied by legislative commentary and background technical papers. These documents, as well as previously published written submissions and a Stakeholder Report, can be accessed at

A National Securities Act

The draft Securities Act, proposed to be adopted federally, largely reflects a harmonization of existing provincial and territorial securities legislation, in order to minimize transitional disruptions. The Alberta Securities Act was used as a starting point. Consideration was also given to the proposed Uniform Securities Act, British Columbia Securities Act of 2004, and the current Ontario Securities Act and relevant federal and international legislation. Core, fundamental provisions are included in the statute while more detailed and technical requirements are to be promulgated through rules.

A National Regulator

The CSC would be a federal institution with an independent Governance Board, accountable to parliament through the federal Finance Minister. The CSC would be responsible for policymaking and rulemaking activities as well as regulatory offence investigation and prosecution. An independent adjudicative tribunal, possibly subject to some Governance Board oversight, would be established to adjudicate securities matters. The federal Minister of Finance, based solely on the slate of candidates put forward by the Nominating Committee, would appoint members to the Governance Board, CSC (including Chair and Vice-Chairs) and adjudicators. The structure recommended by the Expert Panel (including a non-unanimous proposal for tribunal oversight) is illustrated below.

"Willing" Provincial Participation

The national regulatory system would be based on the willing participation of provinces and territories (for purposes in this summary, the term provinces includes territories). Each province could voluntarily participate in the national securities regime. The intent is that the Securities Act would be federal legislation accepted by the voluntarily participating provinces and only applying to such provinces during the transition period to a comprehensive national regime. All existing instruments and rules could continue in effect as instruments and rules under the Securities Act until such time as they could be harmonized under an appropriate rules review process. While not stated in the Report, this author is of the opinion (not necessarily reflecting the views of other Panel members) the near term result would likely be that jurisdictions choosing not to participate could continue under the Passport system, accepting decisions of the CSC in the same manner as the Ontario Securities Commission currently accepts decisions under the Passport system. Like the Ontario Securities Commission, the CSC would not be a Passport regulator.

The Expert Panel report emphasized the importance of an effective, decentralized regulatory structure with CSC offices, both regional and local, located across Canada. It can be expected that initial staff would be drawn from existing employees of participating jurisdictions. The Expert Panel envisages the CSC head office to be located in a province with significant capital market activity, specifically British Columbia, Alberta, Ontario or Québec. The various offices could specialize in specific areas of regulation (e.g., oil & gas policy or financial services), as well as providing local responsiveness. The head office of the adjudicative tribunal could be separate and could potentially be in a different city than the head office of the CSC.

Transition To A National Securities Regime

A staged transition is contemplated by the Expert Panel report, taking place over what would likely be a two to three-year period. The federal government, supported by a transition and planning team, would negotiate a memorandum of understanding with participating provinces. The transition team would also plan for establishment of the CSC and independent adjudicative tribunal and oversee preparation of the official federal legislation. Following passage of the federal Securities Act, the Council of Ministers would be constituted and the Nominating Committee, Governance Board members, Commission Chair, Chief Adjudicator and some other senior staff would be appointed. Arrangements would be made for offices, technology, employee transfers and rule transition.

Market Participant Opt-In

If a sufficient number of provinces do not agree to participate within a reasonable period of time, the Expert Panel report says the federal government should facilitate transition by allowing market participants in non-participating jurisdictions to individually opt-in to the federal regime to the exclusion of provincial legislation. This Market Participant Opt-In feature would work such that a reporting issuer with a head office in a non-participating province could elect to be governed by the CSC and, as a result, could distribute securities under a prospectus in all provinces without having to comply with any provincial securities laws. Similarly, a dealer registrant with a head office in a non-participating province could elect to be governed by the CSC with the effect that it and all of its registered sales people across the country would be governed by the CSC federal regime to the exclusion of provincial securities regulatory requirements. It is hoped that the Market Participant Opt-in feature would expedite the transition to a comprehensive national securities regulatory regime. See decision chart below.

Expert Panel Recommendations

The Expert Panel's key recommendations are summarized as follows.

Objectives, Outcomes and Performance Measurement

1. Adopt a uniform set of core objectives of securities regulation and guiding principles of regulatory conduct for Canada.

2. Adopt a guiding principle of regulatory conduct as being to facilitate the reduction of systemic risk.

3. Prescribe appropriate interim powers in legislation to allow securities regulators to quickly respond to market events that might pose systemic risks to Canada's capital markets (emergency powers).

4. Adopt a guiding principle of regulatory conduct as being the need for regulation to be cost-effective.

5. Reflect the need to facilitate innovation and maintain Canada's capital markets' competitiveness.

6. Develop a single, uniform performance measurement system for securities regulation in Canada that includes timely reporting to the public on the advancement of statutory objectives, service efficiency, enforcement outcomes, and the costs and benefits of regulation.

7. Establish a governance board to provide oversight of the performance measurement system. (Some Panel Members recommended broader oversight including providing strategic perspective on regulatory affairs and oversight on policy and rule changes.)

Advancing Proportionate, More Principles-Based Securities Regulation

8. Continue adopting a more principles-based approach to securities regulation with due regard to reducing regulatory uncertainty, rethinking enforcement, addressing the distinct needs of small public companies, and properly engaging investors.

9. Establish an independent, small reporting issuers' panel.

10. Examine opportunities to use more proportionate-based securities regulation.

11. Pursue a risk-based approach to securities regulation and consider expanding existing Canadian use of that approach.

Independent Adjudicative Tribunal

12. Establish an independent adjudicative tribunal. The securities regulator should retain jurisdiction over certain decisions, such as discretionary exemptions from securities regulations and rules, and matters regarding contested takeover bids. (Some Panel members recommended Governance Board oversight to promote operational efficiency.)

Better Serving Investors

13. Establish a dedicated service to address the lack of information, guidance, and support for investors in the domain of complaint-handling and redress. This service, which would disseminate comprehensive information, could be provided by a securities regulator or another regulatory entity.

14. Improve investor complaint-handling and redress mechanisms:

  • Give securities regulator the power to order compensation in the case of a violation of securities law so that the investor would not be required to resort to the courts;
  • Establish an investor compensation fund, funded by industry, to allow the securities regulator to directly compensate investors for a securities law violation; and
  • Mandate registrant participation in the dispute resolution process through a legislatively designated dispute resolution body.

15. Establish an independent investor panel.

16. Establish a dedicated investor issues group.

Recommended Regulatory Structure For Canada

17. Establish the Canadian Securities Commission to administer a single securities act for Canada. Include an Investor Panel, a Smaller Reporting Issuer Panel, a Governance Board, a Federal-Provincial Nominating Committee, a Council of Ministers, and an Independent Adjudicative Tribunal.

18. Immediately establish a Capital Markets Oversight Office reporting to the federal Minister of Finance.

Opportunities to Further Strengthen Securities Enforcement

19. Conduct a full examination of larger structural reforms to strengthen enforcement in Canada, including a complete assessment of the merits of a National Enforcement Branch that consolidates administrative and criminal enforcement functions.

Improving the Regulation of Derivatives in Canada

20. Regulate exchange-traded derivatives in securities legislation.

21. For OTC derivatives, ensure the Canadian Securities Commission has sufficient policy depth and resources to determine the best path for the regulation of OTC derivatives in the future.

Where Do We Go From Here?

The report was provided on January 12 to the federal Minister of Finance and provincial and territorial ministers responsible for securities regulation. We can hope that the positive momentum generated from the release of the final report and draft Securities Act will bring together a sufficient number of provinces to begin work to establish the CSC.

In his January 27, 2009 Budget Speech, the federal Minister of Finance indicated that the Government would proceed to establish an office to manage the transition to a Canadian Securities Regulator. Later this year, it will table a Federal Securities Act for Canada and the transition office will deliver an administrative plan within 12 months.

The time has come for a national securities regulatory system.

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.

Heather Zordel
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.