Constitutionality uncertainties around the proposed national securities regulator should be resolved within the next year, and in the meantime, the government is working to convince all provinces and territories of the widespread benefits of a single regulator.

“Our objective is to produce a plan and a project that will attract the support of all 13 provinces and territories, but we’re not quite there yet,” said Doug Hyndman, CEO and chair of the Canadian Securities Transition Office, which has been working to develop a proposed Canadian Securities Act and a plan for transition to the new regulatory regime.

Hyndman and other representatives from the transition office participated in a panel discussion hosted by law firm Torys LLP in Toronto on Tuesday. Their comments came a few weeks after the federal government tabled the proposed new Canadian Securities Act, and referred it to the Supreme Court of Canada for an opinion on whether the act is within the legislative authority of parliament. Two provinces, Alberta and Quebec, which oppose the plan, are challenging it in court.



The panelists said they are confident that these challenges will be resolved within a year.

“There is a significant effort to have the litigation resolved as soon as possible,” said Larry Ritchie, executive vice-president and senior policy advisor at the CSTO.

The panelists said the proposed act would lead to a system with stronger and more effective enforcement, greater investor protection and greater efficiency, among other benefits.

They argued that the current system of securities regulation in Canada is fragmented and dysfunctional in many ways, particularly in terms of enforcement. Ritchie said there are too many “silos” and a lack of coordination that prevent the enforcement system from functioning effectively.

“We need to try to break down the silos, and that’s what we think the act does,” he said.

In particular, the new act would incorporate criminal code provisions relating to securities fraud, insider trading and market manipulation, rather than keeping these provisions separate from securities regulation.

“The concept is to have a harmonization of criminal and regulatory offences under one act,” Ritchie said. “There’s a greater emphasis on coordination of efforts between regulators, police and prosecutors.”

Bryan Davies, vice-chair of the CSTO, said the new system would not only solve problems with the existing system, but lead to many improvements.

“There’s room for opportunity to make improvements on a host of fronts,” said Davies.

For instance, he noted that the new act includes a role for the securities regulator to play in promoting financial system stability, which Davies said is a key component of regulation that has been missing in Canada. He noted that regulators worldwide are addressing this area in the aftermath of the financial crisis.

“This third purpose is being added in virtually all jurisdictions to all elements of financial regulation,” said Davies.

The new national regulator will also be held to high standards of governance and accountability, he said. It will be governed by an internal board of directors, and will be subject to all the same accountability standards as a public company, including annual reports and annual meetings.

IE