Canadian Securities Regulation - Efforts To Establish A Single Canadian Securities Regulator

Efforts To Establish A Single Canadian Securities Regulator

Over the past 45 years, the vast majority of studies by independent expert and academic analysts have come out in favour of establishing a Canadian securities regulator, beginning with the Porter Report in 1964 and the Kimber Report in 1965. In the most recent decade, the push for a national regulator has been particularly strong, with reports delivered from the Wise Persons Committee, the Crawford Panel and the Expert Panel on Securities Regulation.

In the most recent final report of the Expert Panel, the Panel made a series of recommendations, the most important being the establishment of a Canadian securities regulator to administer a single securities act for Canada. The Expert Panel provided a recommended transition path to bring this about, with one key step being the creation of a transition and planning team to oversee the transition to a federal regulatory system.

On June 22, 2009, the Government of Canada acted on this recommendation and announced the launch of the Canadian Securities Transition Office to lead Canada’s effort to establish a Canadian securities regulator. The Transition Office is mandated to lead all aspects of the transition, including the development of the proposed federal securities act and the accompanying regulations, collaborating with provinces and territories, and developing and implementing a transition plan for organizational and administrative matters.

Mr. Doug Hyndman is the Chair and Chief Executive Officer of the Transition Office, and Mr. Bryan Davies is the Vice-Chair. Mr. Hyndman had been Chair of the British Columbia Securities Commission since 1987. Mr. Davies has been Chair of the Canada Deposit Insurance Corporation since 2006 and continues in this part-time role. Mr. Davies was previously the Chief Executive Officer and Superintendent of the Financial Services Commission of Ontario.

All Canadian jurisdictions have been invited and encouraged to join in the Government of Canada’s effort, which will build on the existing infrastructure and expertise of the provincial and territorial securities regulators. On October 15, 2009, the Government of Canada announced the appointment of an Advisory Committee of ten Participating Provinces and Territories to the Transition Office with representatives from Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Saskatchewan, British Columbia, Yukon, Northwest Territories and Nunavut. The Advisory Committee provides advice to the Transition Office on the transition to a Canadian securities regulator to ensure that each of the participating governments’ interests are represented in the work of establishing a Canadian securities regulator.

To date, the Transition Office and the Government of Canada have completed two key steps in the transition to a Canadian securities regulator: on May 26, 2010, the Government of Canada tabled for information in the House of Commons the proposed Canadian securities act. The proposed Act was built on provincial securities regulation and harmonizes existing legislation in the form of a single statute. It benefits from the work of the Expert Panel on Securities Regulation and other reform efforts, and reflects domestic and international best practices. It proposes significant improvements in terms of governance, adjudication, financial stability, and regulatory and criminal enforcement, and provides a wide scope of authority to regulate financial instruments and participants in capital markets.

On July 12, 2010, the Transition Office delivered its Transition Plan for the Canadian Securities Regulatory Authority to the Minister of Finance and the ministers responsible for securities regulation of the participating provinces and territories.

Concurrent with releasing the proposed Canadian Securities Act, the Government of Canada referred the proposed Act to the Supreme Court of Canada for its opinion on the following question: Is the annexed proposed Canadian Securities Act within the legislative authority of the Parliament of Canada? The Supreme Court heard the reference on April 13 and 14, 2011. On December 22, 2011 the Supreme Court returned its decision that the proposed Canadian Securities Act as drafted would not be valid under the general branch of the federal trade and commerce power under section 91(2) of the constitution. However, the court indicated that some aspects of the act could be valid under that power. It also noted that it had not been asked for its opinion on the extent of Parliament's legislative authority under other heads of federal power, including the interprovincial and international trade branch of section 91(2). The court concluded that a cooperative legislative approach through which the federal and provincial governments exercise their powers collaboratively would be possible.

Following the Supreme Court of Canada decision, the Government of Canada announced that it was exploring with provinces the possibility of working jointly to establish a common securities regulator.