Source: The Canadian Press

Finance Minister Jim Flaherty is rolling out his controversial legislation to create Canada’s first national securities regulator against stiff opposition from Quebec and Alberta.

The finance minister has scheduled a news conference Wednesday with Denis Lebel, the junior minister in charge of economic development for Quebec.

The draft legislation has been expected and will be sent to the Supreme Court to determine if Ottawa has the constitutional right to impinge on what has been considered provincial jurisdiction.

Flaherty has made a national securities regulator — which would set rules for securities trading and investment, as well as police stock fraud — a priority since becoming finance minister in 2006, following a torturous path of federal-provincial negotiations and consultations.

Canada is the only country in the G20 without a national securities regulator.

Quebec and Alberta have threatened a court action against the move, but it is believed the Supreme Court decision, when it comes, will take precedent.

A federal official said the draft legislation will include an opt-in clause allowing any province or territory to join the process.

The securities regulator has been a hard sell for both the Conservative and the previous Liberal governments, but at last count it was believed that 10 of the 13 jurisdictions were ready to opt in. Manitoba’s position is unclear.

Flaherty has been under bombardment in the House of Commons from Bloc Quebecois MPs for weeks over the issue, and staunchly defended his decision to proceed again Tuesday.

“One thing is clear, in a world of capital markets regulation, there are more and more complex products being sold or sought to be sold to investors (and) … we know investors need protection in Canada,” he said.

“Ordinary Canadians need protection in Canada and they need better protection than is provided by 13 separate regulators with 13 separate sets of rules. That is one of the reasons why we are proposing a Canadian securities regulator.”

Flaherty said Quebec investors in the Earl Jones stock fraud scandal in the province have also urged him to establish a national policing presence.

Quebec Finance Minister Raymond Bachand has suggested that centralizing decisions would immediately shift 500 to 1,000 high-level jobs from Quebec to Toronto. It would be followed by a gradual move of supporting lawyers, accountants and tax specialists.

A study prepared by consulting firm Secor said there are 300,000 direct and indirect financial sector jobs in Quebec, about half in Montreal.

Bachand has said a centralized regulator would weaken Quebec’s financial sector and eventually encourage a further movement of corporate head offices to Toronto. Montreal suffered a dramatic shift in the late 1970s after the Parti Quebecois first came to power.

Regulations and policing over investment and stock exchanges are currently conducted at the provincial level, although the 13 jurisdictions have established a system that allows for co-operation between jurisdictions. Canada is the only country among advanced economies with such a system.

Flaherty has argued in the past that a national regulator will be more effective policing fraud and will be more efficient, as investors would be subject to only one set of rules instead of the current 13.

The draft legislation would allow Quebec and Alberta — the two provinces most vehement against the new body — to opt out, but Quebec has argued that its stock exchange and corporations would be disadvantaged if a national office were established with wide participation.

Several international organizations have urged Canada to establish a national regulator, including the 30-country Organization for Economic Co-operation and Development (OECD).

If all goes according to Ottawa’s plan, a national regulator will be in place and operating in 2012.