One of the big stumbling blocks for a national regulator has always been the question of whether a Canadian Securities Commission would be constitutional.

The recommendation of the Wise Persons’ Committee to Review the Structure of Securities Regulation in Canada for a single national regulator is accompanied by opinions from three prominent law firms, advising that the single regulator is constitutionally possible.

Ogilvy Renault’s Yves Fortier wrote that Parliament could validly enact an express paramountcy clause that precludes provincial securities laws in their entirety.

This means, if a province decided not to enact the legislation, and the federal government decides that this would thwart the whole project, it could include a clause which states that federal legislation alone would govern in specific areas, excluding provincial regulation. “We acknowledge, however, that there is no binding precedent in the case law supporting the validity of such a clause,” Fortier added.

The same findings were echoed by Torys LLP’s John Laskin. “The federal government has legislative authority under its general regulation of trade power… to implement the CSC model,” he wrote. “Based on the factors that the Supreme Court has identified as relevant, the CSC model would constitute a valid general regulation of trade rather than an impermissible regulation of a particular trade. The provinces and territories may enact the corresponding legislation to which this question refers.”

Laskin also suggests that federal legislation that included an express paramountcy clause “would be effective to exclude the operation of provincial and territorial regulation of the matters to which the paramountcy clause applied.”

Fasken Martineau DuMoulin LLP’s Allan McEachern supplied a similar opinion. “In summary, it is my opinion that Parliament has the legislative authority to enact legislation implementing the CSC model. Further, the provinces and territories have legislative authority to enact legislation that incorporates federal securities legislation by reference, delegates administrative powers to the CSC and dissolves the existing provincial and territorial securities regulatory bodies.”

On the paramountcy issue, McEachern wrote, “In summary, federal legislation enacting the CSC model would be effective to exclude provincial securities regulation to the extent that a court was satisfied that Parliament’s legislative purpose would be frustrated by the continued operation of provincial securities legislation.” Although, he added, “In my opinion, such a clause would not, by itself, automatically exclude the operation of provincial legislation.”