If the financial services community was hoping that Tuesday’s federal budget would provide greater clarity on the prospects for a new national securities regulator, it will surely be disappointed.
Securities regulation didn’t fall out of this year’s budget entirely, but it is reduced to a single paragraph, in which the government reiterates its call to the provinces to join the initiative to create a co-operative regulator, which so far only has the buy-in of British Columbia and Ontario. The two other major provinces, Alberta and Quebec, are steadfastly against the proposal — and the others have yet to make their intentions known.
Last month, the government extended the Jan. 31 deadline for reaching a memorandum of agreement between the participating jurisdictions for three months. In Tuesday’s federal budget, the government says it “continues to invite all other provinces and territories to participate in the implementation of the co-operative system.”
In last year’s budget, the government warned that if a “timely agreement” is not reached on a co-operative regulator, it will introduce legislation to take responsibility for the areas of securities regulation that may fall under its jurisdiction, according to the 2011 Supreme Court of Canada decision on the question of regulatory jurisdiction.
The implication is that the government will not wait forever for the provinces to agree on a co-operative model. However, it has also refused to define what it considers timely, or how many provinces need to participate in order for it to consider a co-operative regulator viable.
This year’s budget doesn’t provide any further clues on either question. The government did reiterate its belief that the co-operative regulator that B.C. and Ontario have agreed to in principle will provide better investor protection, improve capital market efficiency and manage systemic risk more effectively.