Canada’s top securities regulator, Bill Rice, chair of the Canadian Securities Administrators and the Alberta Securities Commission, admits that he was somewhat surprised by Thursday’s Supreme Court decision.
Rice, whose government opposed the federal initiative to create a national regulator, says that he came away from the Supreme Court hearing back in April feeling that the decision could go either way. So, while a decision against the federal government wasn’t entirely unexpected, he was surprised that the opinion was also unanimous.
And, to that extent that the decision removes a possible threat to the work of the CSA and the provincial regulators generally, as the head of the ASC, Rice is certainly happy with the result.
As head of the CSA he has to be more circumspect, as there are differences of opinion on the issue within the CSA, most notably in Ontario, which has long advocated the creation of a national regulator.
The question now is where regulation goes from here. Alberta finance minister Ron Liepert hopes there will be a push for Ontario to join the passport system, which the other provinces have created as an alternative to a national regulator. And Rice would certainly be happy to see that happen.
“Our wish would be that we all could be working from basically the same song sheet, and that would obviously mean having Ontario in line with the rest of us,” he says, adding that he recognizes the importance of the Ontario capital markets to the country, and the work of the Ontario Securities Commission on regulation.
“I really hope that everyone would make a best effort, and give that effort a chance at fixing difficulties within the current system, rather than tearing the thing apart. It’s proven to be a good system,” he says.
Yet, it appears that proponents of national regulation expect the federal effort to continue. While the decision unequivocally rejects the proposed federal legislation, it also suggests that there are some areas of legitimate national concern, such as systemic risk — and advocates for a national regulator point to those parts of the opinion as a possible way forward for the federal initiative, which means the debate over the creation of a national regulator may yet continue.
“We don’t know whether it keeps the debate going or not, that will be for others to determine,” Rice says, adding that he wouldn’t expect there to be an opinion in a constitutional case that completely closes the door on the federal effort. “The essence of the decision is that this piece of legislation is not constitutional, and, as far as I’m concerned, that’s the issue that was on the table.”
Moreover, Rice notes he’s not sure how creating a federal role out of the areas cited in the decision would work at a practical level. “We’ve never contemplated what role there would be for some body that somehow claims jurisdiction over systemic risk. I don’t read the judgment as saying the federal government has jurisdiction over that issue,” he says.
In the meantime, the CSA next meets on Jan. 26-27 in Vancouver, and by then the regulators will have had a chance to digest the opinion and see where they go from here. Rice cautions that the regulators will first need to hear where their respective governments stand on the decision. And all eyes will be on Ontario to see the position it takes.
“If the next bit of dialogue is ‘we still want to establish a national securities commission, but we’re going to do it a different way’ then we really haven’t gotten over the difficulties, and we’ll still be distracted,” he cautions.