The big question raised by the deal announced Thursday between British Columbia, Ontario, and the federal government, to establish a co-operative securities regulator is whether any other provinces will join the effort.

Of the other two big players in Canadian securities markets, Alberta says it’s unsure, while Quebec is steadfastly opposed, and is threatening to go to court again if necessary.

According to statements from both Alberta and Quebec, neither was aware of the efforts to come up with today’s deal. (See Investment Executive, Feds create co-operative securities regulator, Sept. 19, 2013.)

Doug Horner, Alberta Treasury Board president and Minister of Finance, said, “I am only learning of this agreement now and will need time to review it before understanding its full implications. I am surprised that all the provinces were not consulted on this proposal before it was announced.”

Quebec’s Minister of Finance and the Economy, Nicolas Marceau, expressed shock at the announcement. “The federal government’s relentless effort to establish a Canada-wide securities regulator runs counter to the constitutional division of fields of jurisdiction, three unanimous motions by the National Assembly, and judgments handed down by the Court of Appeal of Quebec and the Supreme Court of Canada. Through the project announced today, the federal government is seeking to achieve indirectly what it cannot achieve directly,” Marceau said.

And, its Minister for Canadian Intergovernmental Affairs, Alexandre Cloutier, warned that it will go to court, if necessary, to try and block federal legislation that would be necessary to allow the vision sketched out today to proceed.

“The Quebec Attorney General will examine this new federal initiative. If we have to go back to court, we will do so,” Cloutier said. “The last time that the federal government attempted to legislate in this field, recourse to the courts made it possible to avoid the adoption by the Canadian Parliament of unconstitutional legislation.”

Marceau suggested that it sees this latest federal initiative as an effort to kill Quebec’s financial sector. “In addition to running counter to the Constitution, Ottawa’s determination to centralize the regulation of securities in Toronto would have significant adverse consequences for the Quebec financial industry,” he said, adding, “The federal government’s true objective is clear, i.e. to transfer the 154 000 jobs in the Quebec financial sector to Toronto.”

While also apparently surprised by today’s announcement, Alberta appears less opposed; notwithstanding the fact that it has been leading the effort to bolster the existing provincial system. Indeed, a meeting is slated for the Provincial-Territorial Council of Ministers of Securities Regulation on Sept. 23 to work on a deal to finalize its vision of increasingly harmonized provincial regulation.

Horner stressed today that the provinces have made significant progress in harmonizing securities laws, but he was non-committal about whether it would join the federal effort, or continue to resist it.

“Alberta remains committed to an agenda of aggressive economic growth and job creation, which includes an effective and efficient regulatory system that meets the needs of all the provinces and investors,” he said. “But let me be clear – I will continue to protect Alberta’s interests and ensure that decisions affecting our province are made in Alberta.”

By contrast, the financial industry, which has long lobbied in favour of national regulation, is applauding today’s announcement.

Ian Russell, president and CEO of the Investment Industry Association of Canada (IIAC), expressed his support for the deal, saying that the IIAC and its members believe “that a co-operative regulatory system will better protect investors, support efficient capital markets and manage systemic risk.”

Russell also said that he believes the proposed model — which respects constitutional jurisdiction, and is regionally representative — will encourage other provinces to join the effort. “The IIAC is prepared to lend its industry expertise to assist in building momentum and support for this initiative,” he added.

The IIAC’s support is also being echoed by the Canadian Bankers Association (CBA) and the Ontario Teachers’ Pension Plan.

The Investment Funds Institute of Canada (IFIC), which also supports today’s deal, suggests that “it is important that a workable interface is created between participating and non-participating provinces” if all of the other provinces do not sign on. “For efficient capital markets, and an investor-responsive regulatory system, the regulatory process must remain co-operative and harmonized regardless of its structure,” it says.

Investor advocacy group, the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) also came out in support of the deal, saying that proposed structure “is a major step towards” the vision outlined by the Supreme Court. It suggests that the common regulator include investor representation on its board, a statutory investor advisory panel, a single dispute resolution service with binding authority, and that it make investor protection central to its legislation.

FAIR says that a common securities regulator, with investor protection as a top priority,” will provide greater protection for retail and other investors, while at the same time ensuring that the Canadian securities markets operate as efficiently as possible.”