Almost two years from the time that the Supreme Court of Canada (SCC) struck down Ottawa’s effort to create a national securities regulator, the court handed down a new decision that highlights the dysfunction of the prevailing provincial system (see www.investmentexecutive.com, Dec. 5, 2013, “SCC defers to BCSC in trading ban case”).

In December 2011, the SCC largely rejected proposed federal legislation designed to create a national regulator on constitutional grounds. The court ruled that securities regulation has historically been under provincial jurisdiction, although it did allow that certain aspects of regulation could be considered national issues.

That decision, by giving the federal government the latitude to claim jurisdiction over potential national issues such as systemic risk, laid the groundwork for the current federal effort to try again for national securities regulation. The 2011 SCC decision also suggested that a national model could be achieved through co-operation with the provinces. That’s the blueprint that the current proposal aims to follow – although, so far, only British Columbia, Ontario and the feds have agreed to participate.

The new plan for a co-operative national regulator aims to have other provinces signed up by the end of January. Provincial policy-makers were scheduled to meet again in December to discuss the federal proposal.

Those deliberations may well be informed by the recent SCC decision, which concerns the ability of regulators in B.C. to reciprocate an enforcement order handed down in Ontario. Although the case centres on limitation periods, the mere fact that it requires a SCC decision for an enforcement order that’s made in one province to be respected in another underscores the absurdity of the prevailing provincial system.

Indeed, regulators have stepped up their use of reciprocal orders in recent years in an effort to thwart the possibility that a person banned in one province could resume activities in another. But this process depletes enforcement resources and is applied unevenly.

It’s time for provincial policy-makers to put aside their ideologies and create a system that at least minimizes these absurdities.

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