Saskatchewan and N.B. join single securities regulator

Saskatchewan and New Brunswick are joining British Columbia and Ontario in Ottawa’s proposal to create a single national securities regulator that would be fully operational by fall 2015, federal Finance Minister Joe Oliver announced today.

“Today is a landmark day as the Co-operative Capital Markets Regulatory System gains two valuable new members… into this nation building project,” Oliver said. 

Justice Ministers Troy Lifford of New Brunswick and Gordon Wyant of Saskatchewan were in Ottawa for the announcement, alongside Finance Ministers Charles Sousa of Ontario and Mike De Jong of B.C.

Although the two provinces only add approximately three or four per cent of the country’s total market capitalization, it is a symbolic victory for promoters of the single regulator because there is now a subscribing province from every region.

“Together, Ontario, B.C., Saskatchewan and New Brunswick represent more than half of the market capitalization of the listed Canadian companies on the TSX and TSX Venture,” Oliver said.

Lifford said today’s announcement was important not just for New Brunswick but also for “all small capital market jurisdictions.”

Wyant said Saskatchewan decided to take part in the co-operative national system because the status quo no longer reflects today’s reality.

“We recognize that there’s a risk to the national economy if we don’t work more closely on the regulatory and the enforcement side of the securities industry,” Wyant said.

To secure their participation, Ottawa promised Saskatchewan and New Brunswick some concessions, including a cash payment equivalent to the five years of net revenues the provinces would have brought in had they continued operating their own regulators. 

Alberta, Quebec hold out

Wednesday’s announcement leaves six provinces out of Ottawa’s plan, with Alberta and Quebec as the key holdouts, putting into question the effectiveness of a single Canadian securities regulator.

Oliver refused to speculate what would happen if Ottawa does not get all the provinces and territories to buy into the plan before 2015.

‘Let’s not look at unanimous support right away; let’s look at how we can achieve the added support long term.’– Charles Sousa, Ontario’s finance minister

But Sousa was more direct, saying “unanimous consent” had been “the stumbling block” throughout negotiations over the last 50 years.

“Let’s not look at unanimous support right away; let’s look at how we can achieve the added support long term.

“And if there are provinces that don’t participate, well, they don’t. In the meantime, we will continue to advocate for the benefit of companies, the businesses, the investors, the protection mechanisms necessary to make Canada ultimately more competitive.”

Alberta Finance Minister Doug Horner was not pleased with today’s announcement, saying Ottawa’s proposal would lead to “a more fractured system” than the one currently in place.

“We do not believe that four provinces constitute a critical mass of support for a change of this magnitude,” Horner said in a written statement.

Oliver said the federal government would do its part to make participation easier for holdout provinces, adding that “whether they participate or not, their interests will not be undermined.”

Terry Campbell, the president of the Canadian Bankers Association, welcomed today’s announcement. “The federal government has shown a great deal of perseverance and leadership on this important economic issue, as Canada’s current fragmented system puts us out of step with other countries around the world,” he said.

Campbell said the bankers association is encouraging the other provinces “to seriously consider” participating in the proposed system.

Constitutional concerns

The proposal for a national securities regulator was again billed to the holdout provinces today as an agreement that would not encroach on provincial jurisdiction and respect a ruling by the Supreme Court of Canada.

De Jong described it as “an agreement in principle that respects the constitutional division of powers in this country and is also mindful of the pronouncements of the highest court in the land and the legitimate need to address issues related to systemic risk.”

But on Wednesday, Quebec Finance Minister Carlos Leitao reiterated his government’s opposition to a common securities regulator, calling it “an unnecessary structure.”

Quebec Intergovernmental Affairs​ Minister Jean-Marc Fournier added that the Supreme Court’s decision “shut both the front door and back door” to a federally imposed regulator.

The Conservatives had tried to create a national regulator before, but the Supreme Court ruled in December 2011 that it would be unconstitutional.

The top court said Ottawa’s plan would tread on provincial legal jurisdiction, but didn’t close the door to a future “co-operative approach” to creating a national body. 

Lifford said New Brunswick had opposed earlier proposals to reform the national securities regulator based on constitutional concerns but that this agreement shows that “a provincially led alternative” is possible.

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