The Ministers of Finance of British Columbia, Ontario and Canada have agreed to establish a cooperative capital markets regulator, as indicated by a press release1 earlier today.
The proposed regulator will:
- administer a single set of regulations adopted through uniform provincial acts and complementary federal criminal and systemic risk legislation;
- be operationally independent and exercise authority delegated by participating jurisdictions;
- be self-funded based on a single set of fees;
- include an independent adjudicative tribunal;
- be based in Toronto with offices in each participating jurisdiction and an integrated executive management team; and
- have a board of directors that reports to a council of provincial, territorial and federal ministers.
The Supreme Court of Canada, in the Reference Re Securities Act, 2011 SCC 66, determined that the federal government could not act unilaterally in establishing a national securities regulator, but acknowledged that aspects of securities regulation raise valid national concerns and left open the possibility of:
"a cooperative approach that permits a scheme that recognizes the essentially provincial nature of securities regulation while allowing Parliament to deal with genuinely national concerns remains available."
Although initially only British Columbia and Ontario are participating in the new regulator, it is likely that additional jurisdictions will join in. The information accompanying the press release indicates that the federal government will provide transitional funding to those provinces and territories that will lose net revenue as a result of transitioning to the cooperative system.
The new regulator is expected to be operational by July 1, 2015.