Battles ahead as top court clears path for securities czar
Securities industry experts are applauding a Supreme Court of Canada ruling clearing the path for a national securities regulator.
But they say there’s still a long way to go before it actually happens — and Quebec is already promising to go it alone.
In a unanimous ruling released Friday, the Supreme Court said the federal government and the provinces have the power to set up a national regulator, overturning a Quebec court ruling.
The court also said the draft federal legislation for a new regulator is constitutional.
However, the court also said it is up to the provinces and territories whether being a part of a national regulatory system is in their best interests.
Canadian businesses have been pushing for a national regulator for decades, saying it would make financial markets more efficient and lower the cost of doing business in this country.
But while the legal path might be cleared, the political one is much bumpier, warned Stephen Foerster, professor of finance at the Ivey School of Business at Western University.
“This has really always been about politics,” said Foerster, noting that governments of varying political stripes have been pushing the issue for decades, often half-heartedly.
Even if they might agree with a national regulator in theory, cold, hard political calculations might dictate other actions, Foerster said,
“Do they want to be seen as picking a fight with other provinces and their finance ministers?” Foerster asked.
It’s also not an issue that resounds particularly easily with the ordinary person in the street, even though people’s investments — including their RRSPs and Canada Pension Plan — are at stake.
“It might not be a headline grabber, but it’s still important,” said Foerster, a view echoed by Anita Anand, the J.R. Kimber chair in investor protection and corporate governance at the U of T faculty of law.
“This is not just something for the world of finance. This is something that matters to every single Canadian who has any kind of investment,” Anand said.
Even though she supports Friday’s ruling as a step toward a national regulator, Anand says she’d prefer to see the draft federal legislation include an investor advisory panel, as currently exists in Ontario.
“An investor advisory panel is a very important part of investor protection,” Anand said.
In provinces and territories that choose to take part in a national regulatory system, companies wouldn’t have to comply with multiple sets of often-similar regulatory paperwork and legal requirements.
“This will create greater market efficiency,” Anand said.
“It can be cumbersome to have different sets of regulations,” said Foerster, pointing out that Canada is the only G20 country without a national securities regulator.
Having to deal with duplicate regulations is expensive, meaning companies should eventually see a reduction in the cost of doing business.
Still, that might not be the case for Quebec-based companies, given provincial finance minister Eric Girard’s vehement opposition to the idea of a na- tional regulator.
“We understand the decision rendered by the Supreme Court of Canada, but we intend to keep our autonomy and our expertise in Quebec. The financial sector is highly strategic, and we will keep all of our autonomy,” Girard said.