The concept of Federal Securities Regulation in Canada is perennial. It keeps on coming back, most recently via a reference to the Supreme Court of Canada. Pundits will talk, industry insiders will cross their fingers and hope for a favourable ruling, yet I doubt very much the story will end here.
It seems likely that securities regulation is permissible under various head of power in the Constitution. However federal regulation makes no sense if all of the provincial regulators remain in place. There is nothing to be gained gain by adding yet one more layer of regulation. The entire point of the exercise is to unify nationally so as to simplify. The real issue is whether the federal government can succeed in accomplishing this (whether through the Courts or through other channels).
Given the historical absence of federal legislation and the obvious connections with property and civil rights, it seems unlikely (in my opinion) that the SCC would declare, at the request of parliament, that suddenly all that was once provincial is now exclusively federal. This would be a massive restructuring of the federal-provincial power balance, something that the SCC would likely be very reluctant to “ordain†from the bench. Instead, the Court would likely hold that there is significant room for overlap. I wrote a research paper called “Constitutional Complexities Involved in the Implementation of a Federal Securities Regulation Regime in Canada: The View from 2009†that explores this topic in greater detail.
If this view is correct, then the real issue is political. It would be up to the Federal Government to negotiate with the provinces to ensure that regulation becomes unified and not multiplied. This would be difficult, to say the least. Arguably, with Ontario on-side the Feds could go “go it alone†and let the other provinces face the screams of protest from their local investment communities. Meanwhile, the possibility of the London Exchange buy-out adds yet another complicating factor to the politics. This might not be a “Canadian†industry for long.
My prediction: Regardless of the outcome of the reference to the SCC, this issue is far from settled.
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