Plans to set up a new national securities regulator in Canada have come unstuck, following a decision by the country’s supreme court that such an organisation would be unconstitutional.
The proposed Canadian Securities Act, which was set out by federal finance minister Jim Flaherty in May 2010, aims to lay the foundations for a single, national regulator.
At present, there is no single regulatory body or securities trading activity in Canada – rather, each of the country’s ten provinces and three territories has its own watchdog – a situation that Canada’s Conservative government has been keen to reform. Other nations, such as the US, have a single capital markets authority, leaving Canada at a disadvantage, supporters of the plan argue.
However, Canada’s supreme court ruled that the proposed act overreaches genuine national concerns. “While the economic importance and pervasive character of the securities market may in principle support federal intervention, that is qualitatively different from what the provinces can do,” stated the court judgement. “As important as the preservation of capital markets and the maintenance of Canada’s financial stability are, they do not justify a wholesale takeover of the regulation of the securities industry which is the ultimate consequence of the proposed federal legislation.”
Some provinces, especially Quebec and Alberta, have resisted the project from the outset, on the basis that it would undermine their individual authority – despite the fact that the government has promised that provinces would be allowed to opt out of the uniform system.