Canada: Supreme Court Clears Path To National Canadian Securities Regulator

Last Updated: December 7 2018
Article by Wendy Berman, John M. Picone and Kate Byers

The Supreme Court of Canada has endorsed legislation proposing a national, pan-Canadian securities regulator in a unanimous ruling, paving the way for a unified approach to Canadian securities regulation and enforcement.

Canada is the only nation in the G20 that operates without a national securities regulator. Given the increasingly global nature of capital markets, the patchwork of 13 provincial and territorial securities commissions arguably creates systemic hurdles for efficient, harmonized and coordinated oversight of the capital markets.

Key Takeaways

  • The operation of the proposed regulatory regime is dependent on the involvement of both federal and provincial regulators. The nature of securities governance within the constitutional framework of Canada will require the continued involvement of both levels of government to achieve a unified system of regulation that maintains a sound constitutional foundation.
  • This is only the first step towards a national securities regulator. Although this decision has provided a clear constitutional path for the establishment of a national regulator, whether or not such a regime will be implemented depends on the political will and cooperation of the various participating governments.

Summary and Background

In 2011 the Supreme Court of Canada rejected proposed legislation attempting to create a national regulator in Reference re Securities Act. In a unanimous ruling, the Court held that the proposed regulator would be too closely involved in governing the securities industry and the day-to-day regulation of Canadian capital markets, a responsibility which was reserved for the provinces pursuant to the Constitution Act, 1867.

Although the Court rejected the plan, they did provide guidance to policymakers regarding the creation of a national regulator that could withstand constitutional scrutiny, holding that a scheme that adequately recognized the “essentially provincial nature” of securities regulation, while allowing Parliament to deal with matters of “genuine national concern,” remained a possibility.

In 2013, the federal government, along with the governments of Ontario, British Columbia, Saskatchewan, New Brunswick, Prince Edward Island and Yukon, once again sought the creation of a national system of securities regulation (the Cooperative System), which would be administered by a single national regulator known as the Capital Markets Regulatory Authority (the Authority). The Authority would be overseen by a Council of Ministers, comprised of securities regulators from each of the participating jurisdictions, who were beholden to the various provincial and territorial legislatures.

This proposal sought to implement a national system for the regulation of Canadian capital markets, the framework for which was outlined in an agreement between the federal and participating provincial and territorial governments (the Memorandum). The main components of the Memorandum included a model provincial and territorial statute dealing primarily with the day-to-day aspects of the securities trade, with a proposed federal statute that would manage systemic risk, and establish criminal offences relating to the financial markets.

In opposition to the proposed regulatory regime, the Quebec government referred the plan directly to the Quebec Court of Appeal. In May 2017, the Court of Appeal concluded that the plan was unconstitutional, holding that the inclusion of a Council of Minister conflicted with Parliamentary sovereignty, and led to an “abdication of federal jurisdiction,” contrary to Canada’s constitution.

The Decision

On November 9, 2018, the Supreme Court of Canada unanimously overturned the Quebec Court of Appeal’s conclusion, holding that the proposed regulatory regime was constitutionally permissible. In considering the issue, the Court addressed two questions that had been referred to the Court of Appeal by the government of Quebec:

  1. Does the Constitution of Canada authorize the implementation of pan-Canadian securities regulation under the authority of a single regulator?
  2. Does the draft of the federal Capital Markets Stability Act (the Federal Act) exceed the authority of Parliament over the general branch of the trade and commerce power under subsection 91(2) of the Constitution Act, 1867?

In addressing the first question, the Court held that the Cooperative System did not purport to improperly fetter the sovereignty of the provincial legislatures, and did not entail an impermissible delegation of law-making authority. This was largely because under the proposed system, the Council of Ministers remained subordinate to the sovereign will of the various legislatures of the participating governments.

In addressing the second question, the Court held that the proposed Federal Act was intra vires, falling clearly within the general branch of the federal trade and commerce power. The Court concluded that the pith and substance of the proposed legislation was to manage systemic risk and protect against financial crimes, both of which were concerns that fall squarely within federal jurisdiction. Further, the Court held that the manner in which the proposed Federal Act delegated power had no impact upon its constitutionality. Further, it held that the delegation of power to a Council of Ministers, comprised of provincial regulators, is not incompatible with the principle of federalism.

The Upshot

This decision will enable Canada to move closer towards the establishment of a national securities regulator, a goal that many Canadian policymakers have been working towards, and capital markets participants have been endorsing for decades. While this decision provides a clear constitutional path for reform, the ultimate decision to adopt the proposed Cooperative System now falls to federal and provincial lawmakers.

The establishment of a national regulator could go a long way to foster fair and efficient capital markets, while contributing to the integrity and stability of Canada’s financial system. It would also lead to more efficient and consistent coordination of securities regulation and enforcement. A more consistent approach could foster certainty and thereby promote foreign investment in Canada.

The Supreme Court of Canada’s decision in Reference re Pan-Canadian Securities Regulation is available here.

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.

Wendy Berman
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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