Canadian securities regulation

Canadian securities regulation is managed through laws and agencies established by Canada's 13 provincial and territorial governments. Each province and territory has a securities commission or equivalent authority.

Unlike any other major federations, Canada does not have a securities regulatory authority at the federal government level. Provincial governments began to establish regulatory agencies in 1912 (in Manitoba) under their constitutional authority over property and civil rights in each province. The federal government likely has parallel constitutional authority to regulatory securities under its power over trade and commerce but, despite an almost continuous national debate about the subject, the federal parliament has never chosen to enact securities legislation because of opposition from most provinces other than Ontario.

Single Regulator Debate

The federal and Ontario governments, most (but not all) national industry groups, and many media commentators argue that the current structure has resulted in operational inefficiencies. These groups argue that governments should consolidate the provincial regulatory bodies into a single combined entity. Over the past fifteen years, there have been repeated efforts to create a single regulator but all have failed: • Between 1994 and 1996, the federal government attempted to get agreement on a proposal to create a Canadian Securities Commission. There were intermittent negotiations and an agreement was drafted but the federal government quietly dropped the initiative due to opposition in Québec and the western provinces.• In December 2003, the federally-appointed “Wise Persons’ Committee” (WPC), chaired by Michael Phelps, proposed a single, national regulator based in the National Capital Region, with regional offices in Vancouver, Calgary, Winnipeg, Toronto, Montreal and Halifax. The federal government announced plans to work with the provinces to bring this about but nothing came of it.• In June 2006, the Ontario-appointed Crawford Panel released a “Blueprint For a Canadian Securities Commission,” which they called a model for a “common securities regulator” for Canada, operating under common legislation and a single fee structure. Ontario said it would join the passport system if the other provinces would commit to creating a common regulator. The other provinces declined to make that commitment.• In June 2007, the federal Finance minister asked all provinces to support creating a common regulator. No province but Ontario agreed.

Federal Finance Minister Jim Flaherty was reported in July 2008 to say that he was certain that Canada would soon have a single securities regulator. However, therre is still no agreement from provinces other than Ontario. The Quebec National Assembly passed a unanimous resolution in October 2007 asking the federal government to abandon the single regulator project. The Quebec government has said it will never agree to it.

Structure of Canadian Regulation System

The largest of the provincial regulators is the Ontario Securities Commission. Other significant provincial regulators are the [ British Columbia] and [ Alberta] securities commissions, and the Quebec regulator, [ Autorité des marchés financiers] . The provincial and territorial regulators work together to coordinate and harmonize regulation of the Canadian capital markets through the Canadian Securities Administrators (CSA). The major provincial securities regulators also participate in various international co-operative organizations and arrangements.

The CSA has focused its efforts on:
* developing uniform rules and guidelines for securities market participants;
* coordinating approval pocesses;
* developing national electronic systems through which regulatory filings can be made with and processed by all jurisdictions; and• coordinating compliance and enforcement activities.

Since 2004, CSA (excluding the Ontario Securities Commission) has developed and begun implementing a passport system for regulatory approvals. The passport is built on a foundation of harmonized rules. Each public company and each securities firm or representative deals with the principal regulator — the regulator in its home jurisdiction. A decision of the principal regulator to receipt a prospectus, grant a discretionary exemption, or (next year) register a firm or representative applies automatically in each non-principal passport jurisdiction where the person seeks to have it apply.

The Canadian Securities Industry is also regulated by 2 self-regulatory organizations: the IIROC {Investment Industry Regulatory Organization of Canada} and the MFDA (Mutual Fund Dealers Association). The Canadian Securities Administrators oversee these self-regulatory organizations and rely on them as front-line regulators of securities dealers and their representatives.

ee also

* Canadian Securities Institute
* Canadian Securities Administrators (CSA)

External Links

* [ Canadian securities law online, Stikeman Elliot LLP]

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