The minority federal Conservative government has established the Canadian Securities Regulator Transition Office as the next step in the transition to a Canadian securities regulator.
As we previously reported, the Expert Panel on Securities Regulation in Canada, in its final report published on January 12, 2009, recommended the creation of a single Canadian federal securities regulator and called for the creation of a transition and planning team as the first phase of the transition path to a federal securities regime.
The establishment of the Transition Office was announced by the Minister of Finance on June 22, 2009, and Orders-in-Council appointing Douglas M. Hyndman of Vancouver, British Columbia and Bryan P. Davies of Toronto, Ontario as Co-President and part-time Co-President, respectively, of the Transition Office became effective on July 13, 2009. The Transition Office was created by the Canadian Securities Regulation Regime Transition Office Act (Transition Office Act), embedded as Section 297 of the Budget Implementation Act, 2009 (Budget Act). The Budget Act was enacted on March 12, 2009, and Section 297 was proclaimed in force on July 13, 2009.
Mr. Hyndman was Chairman of the British Columbia Securities Commission from 1987 until his appointment to the Transition Office. In 2003, Mr. Hyndman stated in a speech that the chances of the provinces agreeing on a national securities regulator "any time soon" were about as good as those of the Vancouver Canucks hockey team winning the Stanley Cup in the 2003-2004 hockey season. In January 2009, immediately following the release of the Expert Panel’s final report, the British Columbia government announced its support for a single Canadian securities regulator. The Canucks were eliminated in the quarter-finals of the 2009 Stanley Cup playoffs. Mr. Davies is the Chairman of the Canada Deposit Insurance Corporation.
The staffing of the Transition Office was further enhanced by the addition of OSC Vice-Chair Lawrence Ritchie as Executive Vice President and Senior Policy Advisor, on secondment from the OSC until September 2010.
The Transition Office, which has a statutory life of three years, is expected to deliver a plan for the transition to a Canadian securities regulator within one year. It will be advised by an Advisory Committee whose members had not yet been named at the time this article was written.
The Transition Office Act (subsection 14(1)) authorizes the Minister of Finance to make payments in an amount of up to $33 million to the Transition Office. Certain provisions of the Budget Implementation Act (Sections 295 and 296), which came into force on March 12, 2009, authorize the Minister of Finance to make further payments in an amount of up to $150 million to provinces and territories for matters relating to the establishment of the Canadian securities regulation regime and a Canadian regulatory authority. It is expected that these amounts will be used to purchase assets of provincial regulators and to make payments to compensate for the loss of revenues derived from securities regulation.
As we previously reported, while the Provinces of Ontario and British Columbia have expressed support, the Provinces of Alberta, Québec and Manitoba oppose the establishment of a Canadian securities commission. The Expert Panel, in its final report, referred to assurances it had received from its constitutional advisor as to the constitutional authority of Parliament and stated that as an ultimate measure, federal securities legislation might fully occupy the field.
Both the current Conservative federal government and the previous Liberal federal government expressed support for a Canadian securities commission, and Conservative and Liberal members voted to approve the Budget Act earlier this year. However, in reply to a motion made by the Bloc Québécois in Parliament in mid-June 2009, calling for confirmation that securities regulation falls under the exclusive jurisdiction of the provinces, Liberal members of Parliament stated that the current policy of their party is that a future Liberal government would refer the constitutional jurisdiction question to the Supreme Court of Canada. The Bloc Québécois motion was defeated by a vote from which Liberal members abstained.
The constitutional challenge will continue, as the government of the Province of Québec announced on July 7, 2009 that it will launch a constitutional reference in the Québec Court of Appeal for an opinion with respect to the decision of the federal government to proceed with the creation of a Canadian securities regulator.