Cooperative National Securities Regulation Framework Upheld by the Supreme Court of Canada
The Supreme Court of Canada upheld the constitutionality of the proposed cooperative pan-Canadian Cooperative Capital Markets Regulatory System (CCMR).
The CCMR is a cooperative regulatory framework based on agreements between the Federal Government and participating provinces and territories that aims to replace the current securities regulatory regime with a single harmonized regime across all participating jurisdictions built on a model provincial statute and a more narrowly focused federal statute aimed at regulating national “systemic risks” affecting capital markets . Current CCMR participants are Ontario, British Columbia, Saskatchewan, New Brunswick, Prince Edward Island, Yukon and the Federal Government. Nova Scotia has also announced its intention to join the CCMR.
In the 2011 Reference Re Securities Act, the Supreme Court decided that the Federal Government is not constitutionally permitted to unilaterally regulate securities nationally and that only certain matters of national or systemic significance may properly be regulated at the federal level, while the day-to-day regulation of securities is a provincial/territorial power. The CCMR was designed in response to this 2011 decision.
Today the Supreme Court found that the CCMR’s proposed federal and provincial statutes respect the delineation between the powers of the provinces and territories to regulate securities and the much more circumscribed powers of the federal government to regulate systemic risk, as determined by the Court in its 2011 decision. The Court also found that certain provisions in an inter-provincial agreement which speak to the making of regulations under the provincial and federal statutes and to amendments to the model provincial securities legislation do not abridge provincial legislative power but rather are subject to it and therefore valid under constitutional law.
The launch of the CCMR would mark a significant change in securities regulation in Canada and would affect every major securities regulatory process and regime, including registration, prospectus qualification, insider trading, multi-jurisdictional applications for exemptive relief, derivatives regulation and enforcement. At least initially, the CCMR is expected to co-exist with and mesh with the rules of important non-participating jurisdictions, including Quebec and Alberta. For more detailed information regarding key elements of the CCMR, please see our previous articles HERE and HERE and the most recently-published CCMR Memorandum of Agreement HERE.
Our Securities Regulation and Investment Products Group will continue to monitor the CCMR closely and publish further articles and commentary regarding significant developments that might impact our clients.