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Reference Concerning the Constitutionality of the Implementation of Pan-Canadian Securities Regulation Under the Authority of a Single Regulator

On September 8, 2014, the federal government made public a Memorandum of Agreement Regarding the Cooperative Capital Markets Regulatory System entered into, to date, by British Columbia, Prince Edward Island, New Brunswick, Ontario, Saskatchewan, and Yukon. Draft versions of a uniform provincial and territorial legislation on capital markets1 and complementary federal legislation, applicable to non-participating provinces and territories as well, were also released at that time. The Memorandum of Agreement and the draft legislation foresee the creation of a new pan-Canadian cooperative body, the Capital Markets Regulatory Authority.

It should be pointed out that, in 2011, the Supreme Court of Canada considered the constitutionality of a similar initiative in the Reference re Securities Act and unanimously concluded “that the day-to-day regulation of securities […] essentially remains a matter of property and civil rights”, an exclusive provincial legislative competence under section 92(13) of the Constitution Act, 1867.

It should also be noted that the Autorité des marchés financiers, an independent body, is currently regulating Québec’s financial sector. Furthermore, the harmonized collaborative regime regulating securities, established in 2004 among the provinces and territories with the exception of Ontario, allows the attainment of the goals of investor protection and economic development, while taking local markets into account.

The federal initiative announced in 2014 has the same objective as that challenged in the 2011 reference to the Supreme Court. The Government of Québec decided to refer the case to the Court of Appeal of Québec for its opinion on the constitutionality of this new initiative (Order in Council No. 642-2015, July 7, 2015).

The questions submitted to the Court of Appeal were formulated as follows (original version in French):

  1. Does the Constitution of Canada authorize the implementation of pan-Canadian securities regulation under the authority of a single regulator, according to the model established by the most recent publication of the “Memorandum of Agreement Regarding the Cooperative Capital Markets Regulatory System”?
  2. Does the most recent version of the draft of the federal “Capital Markets Stability Act” exceed the authority of the Parliament of Canada over the general branch of the trade and commerce power under section 91(2) of the Constitution Act, 1867?

For further information on this matter, you may consult the following documents:

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1. A new version of the draft uniform provincial and territorial legislation as well as a draft regulation were published on August 25, 2015.

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