Plan to cre­ate a na­tional se­cu­ri­ties reg­u­la­tor is con­sti­tu­tional

Journal Pioneer - - CANADA - BY JIM BRON­SKILL

The Supreme Court of Canada says the Con­sti­tu­tion al­lows Ot­tawa and the prov­inces to set up a na­tional se­cu­ri­ties reg­u­la­tor.

In its unan­i­mous rul­ing Fri­day, the high court also finds fed­eral draft leg­is­la­tion for coun­try­wide over­sight of stocks, bonds and other in­vest­ments falls within Par­lia­ment’s pow­ers on trade and com­merce.

The de­ci­sion could help ad­vance plans for a na­tional reg­u­la­tor of cap­i­tal mar­kets, an idea un­der dis­cus­sion since at least the 1930s. Sup­port­ers of the con­cept say it would elim­i­nate du­pli­ca­tion, re­duce red tape and en­sure more con­sis­tent en­force­ment and in­vestor pro­tec­tion.

But 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.

In an ear­lier rul­ing, 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.

How­ever, the court said it was open to Ot­tawa and the prov­inces to ex­er­cise their 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 pan-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.

The fed­eral gov­ern­ment ap­pealed to the Supreme Court on both mat­ters.

In its de­ci­sion Fri­day, the high court says the pro­posed co­op­er­a­tive sys­tem “does not im­prop­erly fet­ter” the sovereignty of leg­is­la­tures.

In ad­di­tion, the draft fed­eral leg­is­la­tion falls within Par­lia­ment’s trade and com­merce pow­ers un­der the Con­sti­tu­tion, the court con­cludes.

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