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Canada national regulator ruled unlawful

Friday 23 December 2011 - by Will.Henley@gfsnews.com


The Canadian federal government's bid to establish a national securities regulator was quashed on Thursday by the Supreme Court, which concluded the plan was unconstitutional.

The court threw out legislation put forward by Prime Minister Stephen Harper and finance minister Jim Flaherty, in a move that sees responsibility for securities regulation retained by the provinces.

"Canada has not established that the area of securities has been so transformed that it now falls to be regulated under the federal head of power," said the ruling.

The decision will be seen as a major victory for the states of Alberta and Quebec, which alongside Manitoba and New Brunswick had strongly resisted the Canadian Securities Act introduced into parliament by Flaherty in May last year.

"The court has provided clear direction that the regulation of securities is a provincial jurisdiction," said Ron Liepert, finance minister of Alberta following the ruling.

The idea, backed by the financial industry, was to replace the current system which sees individual states and territories retain control over securities and stock markets. The quirk means that it is the only industrialised nation without a national securities regulator, despite having national prudential and consumer regulatory authorities.


The federal government said the proposed legislation would also boost the country's ability to advocate a common position in international securities negotiations.

The defeat however will be a bitter blow for the finance minister, who in June 2009 first established a transition office within the Department of Finance to pave the way for the new centralised regulator.

Flaherty said at the time that the new national securities regulator would "enable Canada to respond swiftly and efficiently to developments in the financial sector and speak with one voice" on the international stage.

"It will also provide clearer national accountability, strengthen enforcement, better serve the needs of investors, and eliminate barriers within our own country," he said.

Proponents of the legislation highlighted the fact that the court seemed to recognise that there is some national jurisdiction over securities, as they remained hopeful that a national securities regulator could still be formed.


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