OTTAWA – Finance Minister Jim Flaherty is sending out a notice that he is prepared to go it alone on establishing a national securities regulator if provinces won’t agree.
The declaration is contained in a two-page notice in the 2013 budget, informing the provinces that Ottawa still seeks a co-operative approach with the provinces, but it won’t wait forever.
“If a timely agreement cannot be reached on a common regulator, the government will propose legislation to carry out its regulatory responsibilities consistent with the decision rendered by the Supreme Court of Canada,” the budget states.
The last time Ottawa tried to move ahead with a national regulator, several provinces led by Quebec and Alberta fought to stop it from intruding in provincial authority.
The Supreme Court agreed with the provinces, but left Flaherty an opening by ruling that Ottawa has a role in matters of national importance and scope, including preventing systemic risks in the financial system.
In the budget statement, the government said it was prepared to delegate the administration of its own securities legislation to a national regulator “if a critical mass of provinces and territories were willing to do the same.”
But if an “timely agreement” cannot be reached, it would go ahead with legislation dealing with its areas of jurisdiction as defined by the court.
“This will include the capacity to monitor, prevent and respond to systemic risks emerging from capital markets,” it said.
“A federal capital markets regulatory framework would be applied consistently on a national basis and would not displace provincial securities commissions, which would still manage the day-to-day regulation of securities activities.”
It gives no time limit for an agreement, but in the meantime it is extending the mandate of the Canadian Securities Transition Office to work on the project.
Flaherty has been trying to establish a national regulator almost from the first day he became finance minister, only to be frustrated at every turn by provincial objections and most recently by the courts.
He has pointed out that Canada is the only major industrialized country without a single regulator, increasing costs to businesses seeking to raise money in Canada and making enforcement and prosecution of fraud more difficult.