British Columbia, Ontario and Canada announced yesterday their agreement to establish a national securities regulator through a cooperative model. The cooperative model is intended to facilitate the launch of a national securities regulator after a 2011 Supreme Court of Canada decision that the provinces enjoy much more constitutional authority to regulate securities law than the federal government
The proposed cooperative capital markets regulator (the “CMR”) will be responsible for policy development, regulation-making, regulatory operations and enforcement. Provincial and federal legislation is scheduled to be enacted by December 2014 and the CMR is expected to be operational by July 2015. The CMR will administer provincial securities legislation of BC, Ontario and any other cooperating province as well as federal legislation regarding securities related criminal matters and systemic risks in national markets and national data collection.
Separation of regulatory and adjudicative functions. The single CMR will include a regulatory division and a separate and independent adjudicative tribunal. A chief regulator will be appointed by the Board of Directors. The chief regulator will propose deputy chief regulators for provinces with major Canadian capital markets to be approved by the Board.
Legislative process. A single set of regulations will be administered, including:
- uniform provincial and territorial legislation adopted by each participating jurisdiction to address matters currently addressed by provincial and territorial securities legislation. The provincial and territorial legislation will be agreed on in advance of the implementation of the CMR. Amendments will require the approval of (i) at least 50% of all members of the Council of Ministers and (ii) the Ministers from each major capital markets jurisdiction; and
- federal legislation to address criminal matters and systemic risks in national capital markets and data collection. Amendments to federal legislation will require the federal Minister of Finance to consult with the other members of the Council of Ministers. The power to make federal regulations regarding systemic risks in national markets and data collection, as well as related national emergency powers, will be delegated to the CMR.
Fee structure. There will be a single and simplified fee structure to allow self-funding of the CMR. The federal government will provide transitional funding to participating provinces.
Other important elements.
- Any fundamental change to the CMR, including an amendment to the agreement between the participating jurisdictions, will require the approval of the Minister from each major capital markets province and the federal Minister of Finance.
Board of Directors. The CMR Board will be broadly representative of the participating jurisdictions, comprised of nine to twelve independent directors who are appointed by the Council of Ministers
Independent Adjudicative Tribunal. The Tribunal will be comprised of independent members who are appointed by the Council of Ministers based on recommendations from an independent nominating committee. The members will be selected through a merit-based search. The Council of Ministers will appoint a chief adjudicator. The Tribunal will conduct hearings in English and French across Canada and it will be supported by a secretary, staff and a counsel.
Executive Committee. An Executive Committee, comprised of the chief regulator and the deputy chief regulators, will serve as the executive decision-making body for the CMR.
Executive head office. The executive head office will be in Toronto. Each participating province will have a regulatory office with staff and resources commensurate with the capital markets activity and the regulatory and enforcement demands of the province. Each regulatory office will continue to provide the services it currently provides.