Four participating provinces and the federal government unveiled a formal agreement, and draft legislation, today that represent another step toward realizing the dream of creating a cooperative securities regulator in Canada.
The governments of B.C., New Brunswick, Ontario and Saskatchewan, along with the feds, announced that they have signed a Memorandum of Agreement (MOA) that sets the terms and conditions for the creation of the new Cooperative Capital Markets Regulatory system (CCMR). At the same time, they also released draft federal and provincial legislation for consultation.
The goal is to launch the new regulator in the fall of 2015, although it still faces various hurdles, including the opposition of Alberta and Québec, not to mention the ordinary process of getting legislation passed.
The drafts of the proposed provincial and federal legislation are out for comment for 60 days until November 7, including draft uniform provincial legislation, known as the Provincial Capital Markets Act (PCMA), which aims to update current provincial securities legislation, and introduces new elements “to promote flexibility within a robust regulatory framework.” The PCMA will be proposed for legislative adoption by each participating province and territory.
The accompanying proposed federal legislation, known as the Capital Markets Stability Act (CMSA), aims to address certain national issues, such as systemic risk, national data collection, and criminal law matters. The federal government indicates that the proposed federal legislation is in line with the Supreme Court of Canada (SCC) decision of 2011, which rejected legislation put forward at that time to create a national regulator, but did suggest that there were certain areas that may be open to federal jurisdiction, including the monitoring of systemic risk.
Next, the participating jurisdictions will work on drafting the initial regulations, and the means of establishing the Capital Markets Regulatory Authority. They also continue to call on the other provinces and territories to participate in the proposed new system. Apart from Alberta and Québec, which have been openly critical of the idea, the other provinces have been noncommittal about whether they expect to join the new cooperative system.
“Canada needs a cooperative system that will strengthen our capital markets, reduce red tape for businesses, and attract more capital investment. Furthermore, it will enhance investor protection and improve the oversight of systemic risk. This is key to creating jobs, growth, and long-term prosperity for Canadians, while respecting the guidance provided by the Supreme Court,” says Finance Minister Joe Oliver. “Today’s agreement and the release of the consultation drafts of proposed legislation for the cooperative system will provide all stakeholders with a clear understanding of how the framework is intended to work.”
Commenting on the latest step toward a sort of national regulator, Ian Russell, president and CEO of the Toronto-based Investment Industry Association of Canada (IIAC), issued a statement praising the governments’ progress. “We are pleased that these draft documents have been unveiled,” he said. “We view this as a positive step forward as these legislative documents are the legal framework for the new cooperative securities regulator.”
Russell said that the IIAC will be providing feedback on the drafts after reviewing them and consulting with federal and provincial authorities, and that it’s looking forward to the proposed new rules too. “We look forward to providing our views and industry perspectives on the forthcoming draft regulations that will guide capital markets activity and on the operational aspects of the CCMRS,” he added.