On September 19, 2013, the Ministers of Finance of British Columbia, Ontario and Canada announced that they had agreed to establish a cooperative capital markets regulatory system.
A backgrounder on the agreed elements of a cooperative capital markets regulatory system, as well as a copy of the agreement in principle to move towards a cooperative capital markets regulatory system, are available here.
According to the press release announcing this agreement, the cooperative securities regulator will better protect investors, enhance Canada’s financial services sector, support efficient capital markets and manage systemic risk.
The newly agreed to cooperative capital markets regulatory system will feature a single regulator administering a single set of regulations and be operationally independent and self-funded through a single set of fees. It will have an executive head office in Toronto and a nationally integrated executive management team and be directed by an expert board of independent directors with broad capital markets-related expertise. A Council of Ministers of all participating jurisdictions will oversee the cooperative system.
The establishment of a cooperative capital markets regulatory system supported by the Federal government does not come as a complete surprise. Indeed, Mr. Flaherty has been trying to establish a national regulator almost from the first day he became finance minister. For all intents and purposes, the last federal budget made the creation of a national securities regulator inevitable.
In his March 2013 budget, Mr. Flaherty specifically indicated his intention to propose legislation to carry out the Government’s responsibilities for capital markets, consistent with the decision rendered by the Supreme Court of Canada in 2011 (which ruled that Ottawa’s attempts to create a single federal regulator infringed on some provincial constitutional responsibilities), if a timely agreement could not be reached with provinces and territories on a common securities regulator.
Not surprisingly, the Ministers of Finance of British Columbia, Ontario and Canada invite all provinces and territories to participate in the proposed system.
Now that two provincial ministers and the federal minister have agreed to move towards the creation of a cooperative capital markets regulatory system, will other provinces and territories (including Quebec and Alberta) decide to participate?