On September 19, 2013, the Ministers of Finance of Canada, Ontario and British Columbia agreed in principle to establish a cooperative capital markets regulatory system (the Cooperative System) with one common regulator (the Common Regulator). The other provinces and territories have been invited to participate in the proposed Cooperative System.

The announcement of the Cooperative System follows the 2011 Supreme Court of Canada ruling that the Government of Canada's attempt to impose a common securities regulator on the provinces and territories was unconstitutional. Based on media reports relating to the announcement of the proposed Cooperative System, Quebec and Alberta continue to oppose a national regulator.

The proposed Cooperative System would include, among other things, the following elements:

  • a Common Regulator with a head office in Toronto and regulatory offices located in each participating province, directed by an expert board of directors appointed by the council of Ministers that will be independent, have relevant capital markets-related expertise and be broadly representative of the regions of Canada
  • a council of Ministers composed of the Minister of Finance of Canada and the Ministers responsible for capital markets regulation in each participating jurisdiction
  • a uniform set of securities laws and regulations of each provincial or territorial participating jurisdiction addressing all matters of provincial and territorial jurisdiction in the regulation of capital markets
  • federal legislation applying throughout Canada that addresses criminal matters and matters relating to systemic risk in national capital markets and national data collection
  • a single, simplified fee structure allowing for the self-funding of the Common Regulator without imposing unnecessary or disproportionate costs on market participants.

Under the agreement in principle, the federal government has agreed to provide transitional funding to those provinces and territories that will lose net revenue as a result of transitioning to the cooperative system.

Based on the timeline set out in the agreement in principle, the parties expect the Common Regulator to be operational by July 1, 2015, following, among other things, the execution of an agreement by each of the participating jurisdictions on or before May 30, 2014 setting out the terms and conditions for the integration of their securities regulatory body into the Common Regulator.

It remains to be seen how many of the other provinces and territories will join the Cooperative System given previous opposition to a national securities regulator.