Supreme Court clears path for na­tional reg­u­la­tor

Times Colonist - - Business -

OT­TAWA — The Constitution al­lows Ot­tawa and the provinces to set up a na­tional se­cu­ri­ties reg­u­la­tor, the Supreme Court says in a rul­ing that could help ad­vance a plan for coun­try­wide over­sight of cap­i­tal mar­kets.

In its unan­i­mous rul­ing Fri­day, the high court also found fed­eral draft leg­is­la­tion for na­tional reg­u­la­tion of the trade in stocks, bonds and other in­vest­ments falls within Par­lia­ment’s pow­ers, as it does not tread on pro­vin­cial turf.

The de­ci­sion pro­vides long­sought le­gal clar­ity for an idea un­der dis­cus­sion since at least the 1930s. How­ever, the court stressed it is up to the provinces and ter­ri­to­ries to de­cide whether par­tic­i­pa­tion in a na­tional reg­u­la­tory sys­tem is in their best in­ter­ests, call­ing it a “po­lit­i­cal choice.”

Que­bec Fi­nance Min­is­ter Eric Gi­rard swiftly reaf­firmed the prov­ince’s op­po­si­tion to a na­tional regime. “We ac­knowl­edge the Supreme Court of Canada rul­ing, but in­tend to re­tain our au­ton­omy and keep our ex­per­tise in Que­bec.”

The divi­sion of con­sti­tu­tional pow­ers has made Canada an anom­aly — a lead­ing in­dus­tri­al­ized coun­try with a patch­work of pro­vin­cial and ter­ri­to­rial reg­u­la­tors in­stead of a na­tional one.

Sup­port­ers of a pan-Cana­dian reg­u­la­tor say it would elim­i­nate du­pli­ca­tion, re­duce red tape and en­sure more con­sis­tent en­force­ment and in­vestor pro­tec­tion.

The Supreme Court said in 2011 that a draft bill to cre­ate a na­tional reg­u­la­tor strayed be­yond fed­eral ju­ris­dic­tion, as the provinces and ter­ri­to­ries have con­sti­tu­tional au­thor­ity over most el­e­ments of se­cu­ri­ties reg­u­la­tion.

Still, the court said it was open to Ot­tawa and the provinces to ex­er­cise re­spec­tive pow­ers over se­cu­ri­ties har­mo­niously, in the spirit of co-op­er­a­tive fed­er­al­ism.

With that in mind, Bri­tish Columbia, Saskatchewan, On­tario, New Brunswick, Prince Ed­ward Is­land, Yukon and the fed­eral gov­ern­ment signed a mem­o­ran­dum of agree­ment to cre­ate a new reg­u­la­tory sys­tem.

The plan in­cludes a com­mon reg­u­la­tor, a coun­cil of min­is­ters to play a su­per­vi­sory role, a model law that provinces and ter­ri­to­ries could pass, and fed­eral leg­is­la­tion to man­age sys­temic risk, al­low for data col­lec­tion and ad­dress crim­i­nal mat­ters.

In July 2015, the Que­bec gov­ern­ment asked the prov­ince’s Court of Ap­peal to con­sider the pro­posal’s con­sti­tu­tional va­lid­ity.

The Que­bec ap­peal court said last year the Constitution does not au­tho­rize cre­ation of a Cana­dian se­cu­ri­ties reg­u­la­tor un­der a sin­gle body as en­vi­sioned in the mem­o­ran­dum of agree­ment. It also flagged con­cerns with as­pects of the draft fed­eral leg­is­la­tion on the pro­posed role and pow­ers of the coun­cil of min­is­ters.

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