Steps Towards a National Securities Regulator

On September 19, 2013, the federal Minister of Finance and the finance ministers from British Columbia and Ontario announced an agreement in principle to establish a national securities regulator.

Currently, securities regulation in Canada is comprised of 13 sets of rules and regulations which are administered by the 13 provinces and territories. The compartmentalized system has received criticism from both practitioners and academics. The complexity and duplicative nature of the current regime frustrates domestic market participants, as well as foreign entities looking to do business in Canada. Uncertainty and inconsistency of the current regime has a negative impact on the reputation of Canadian capital markets.

The collaborative attempt at introducing a national securities regulator reflects the 2011 decision of the Supreme Court of Canada, which found that the federal government’s previous attempt at establishing a national securities regulator was unconstitutional. According to the agreement in principle, each of the participating provinces and territories will only be addressing matters within their constitutional jurisdiction.

The agreement outlines the proposed system as follows:

  • Each participating jurisdiction will adopt uniform provincial or territorial legislation relating to the regulation of securities markets
  • Complementary federal legislation will outline criminal matters and systemic risk in the capital markets
  • A single independent regulator with its own adjudicative tribunal will administer the provincial and federal legislation
  • There will be offices in each of the participating jurisdictions, providing the same range of services that the provincial regulators currently provide
  • A simplified fee structure will be implemented and will allow for the new regulator to be self-funded

At this stage, British Columbia and Ontario plan to discuss the agreement with the other provinces and territories to try and convince them to participate in the proposed system. The target timeline for implementing the new regime is for each participating jurisdiction to enact the applicable legislation on or before December 31, 2014. The new national regulator is expected to be operational by July 1, 2015.

If you would like further details, you can find the agreement here. Please feel free to contact one of our securities law professionals if you have any questions.

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