Quebec’s Court of Appeal turns down proposal for pan-Canadian securities regulation

Maria Nikolova

The proposed regime “fetters the parliamentary sovereignty of the participating provinces and is consequently unconstitutional”, according to the Quebec Court of Appeal.

While Canada’s provincial authorities struggle to implement a binary options ban, a wider push for a pan-Canadian securities regulation has seen dynamic development over the past several months. The push to establish a Cooperative Capital Markets Regulatory System, a securities regulation at a national level in Canada, hit the curb on May 10, 2017. In a ruling, handed down yesterday, the Quebec Court of Appeal said the proposed pan-Canadian securities regulator is unconstitutional given that the system for amending securities laws would result in jurisdictional issues between the federal government and Canada’s provinces.

The efforts to form some sort of securities regulation at the national level for Canada were revived in the fall of 2016. This happened five years after the Supreme Court of Canada (SCC) ruled against plans for a pan-Canadian securities regulator in late 2011. Opponents of the move say the planned legislation is indeed a covert amendment to the constitution, which would undermine the accountability of the regulators to their legislatures. Those in favour of the proposal insist that it is necessary to protect Canada’s financial system, and that this cannot be achieved with a regulatory framework that is solely a provincial responsibility.

Let’s note for that matter that under the proposals, at the head of the Regime sits a Council of Ministers, composed of the ministers charged with regulating capital markets in the participating provinces and territory as well as the Minister of Finance of Canada.

The first question the Court considered was whether the Constitution of Canada authorize the implementation of pan-Canadian securities regulation under the authority of a single regulator. The majority of judges answered “No”. In their view, the mechanism proposed “fetters the parliamentary sovereignty of the participating provinces and is consequently unconstitutional”.

On the second question, the judges answered that the powers of the planned Council of Ministers would “undermine the constitutional foundation of the federal act and to be irreconcilable with the purposes of the proposed federal legislation.”

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