The quest to create a national securities regulator goes back to 1935 – one corporate lawyer dubs it a holy grail of the capital markets – and calls for such a regulatory body have been strong since the 1970s.
In 2011, the Supreme Court was unanimous in ruling a proposed national regulator unconstitutional, saying that, as drafted by the federal government, it would have been too closely involved in day-to-day regulation of capital markets – a provincial responsibility.
Under Canadas 1867 Constitution, the federal government is responsible for trade and commerce, and the provinces have authority over property and civil rights. The Supreme Court left the door open then to the creation of a pan-Canadian regulator involving a co-operative effort.
In 2013, the federal government rewrote its plan for a regulator, called the Capital Markets Regulatory Authority. Six provinces and one territory – Ontario, British Columbia, Saskatchewan, Prince Edward Island, New Brunswick and Yukon – have agreed to participate. Quebec and Alberta oppose the plan, structured as a co-operative agency run by those provinces and territories that choose to opt in. Overseen by a council of ministers from each participating jurisdiction, it was crafted to ensure that the provinces do not cede power to Ottawa.
The Quebec government referred the plan to the Quebec Court of Appeal, which ruled it unconstitutional.
The argument for a national regulator is that it will make the rules more consistent across the country, help regulators manage systemic risks and improve enforcement.
The Supreme Court of Canada says the Constitution allows Ottawa and the provinces to set up a national securities regulator.
In addition, the high court finds federal draft legislation for countrywide oversight of stocks, bonds and other investments falls within Parliament's powers over trade and commerce.
The unanimous ruling could help advance plans for a national regulator of capital markets, an idea under discussion since at least the 1930s.
British Columbia, Saskatchewan, Ontario, New Brunswick, Prince Edward Island, Yukon and the federal government have signed a memorandum of agreement to create a new model.
The plan includes a common regulator, a council of ministers to play a supervisory role, a model law that provinces and territories could pass, and federal legislation to manage systemic risk, allow for data collection and address criminal matters.
The Quebec Court of Appeal said last year that the overall plan was unconstitutional, prompting Ottawa to head to the Supreme Court.
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