Will the New Cooperative Securities Regulator Get Off the Ground? Silence from New Government Prompts Doubts

In the five months since the federal Liberal government took office, it has remained largely silent on the future of the cooperative capital markets regulatory system (Cooperative System), even as Alberta and Quebec maintain their opposition. The federal government’s silence is increasingly prompting questions about whether it will continue to work with participating provinces and territories to implement the Cooperative System.

Initial drafts of the provincial Capital Markets Act (CMA) and the federal Capital Markets Stability Act (CMSA) were published for comment in September 2014. A revised consultation draft of the CMA and the draft initial regulations (Consultation Drafts) were released in August 2015, and a revised draft of the CMSA is expected by the summer of 2016.

Comments on the proposed CMA raised concerns about the numerous substantive changes from the current Ontario securities regulatory regime that are proposed in the Consultation Drafts and the process relating to the development of the new CMA. See our March 2016 Blakes Bulletin: New Capital Markets Regulator: Extent of Consultation and CMA Provisions Remain of Concern.

The CMA is intended to replace existing provincial and territorial securities legislation in Ontario, British Columbia, New Brunswick, Saskatchewan, Prince Edward Island and Yukon (Participating Jurisdictions).

Blakes has published a series of Bulletins regarding various aspects of the Cooperative System and summarizing comments received on the drafts of the CMSA, the CMA and the CMA regulations (please see our various Bulletins posted on our website).


Prior to the recent federal budget, the new federal government made only one public comment on the cooperative system since being sworn in in early November. During pre-budget consultations in early January, federal Finance Minister Bill Morneau said that the new Liberal government favoured a “collaborative national securities regulator,” but no other public statement on the topic by Mr. Morneau or any other member of the federal government has been reported.

Prime Minister Justin Trudeau did not mention or refer to the CMSA or the Cooperative System in his list of more than 25 “top priorities” identified for Mr. Morneau in the ministerial mandate letter from the prime minister.


When Mr. Morneau delivered the new government’s inaugural budget in late March, the budget indicated that the government intended to release a revised draft of the CMSA by the summer, but did not refer to the Cooperative System as such. Rather, the budget emphasized the Supreme Court of Canada’s acknowledgement, in its decision on the reference regarding a national securities regulator, that the federal government has a role to play in managing systemic risk in the Canadian capital markets.

In contrast to the new government’s budget, each of the budgets presented by the previous Conservative government in its last three years in office referred explicitly to its role in the development and establishment of the Cooperative System. The March 2015 budget, the previous government’s last, emphasized the government’s engagement with the Participating Jurisdictions on the Cooperative System and highlighted its views as to the benefits of the Cooperative System.


While the Participating Jurisdictions are considering the comments received on the revised consultation draft of the CMA and the initial regulations, opposition to the Cooperative System from Alberta and Quebec, two of the largest capital markets jurisdictions in Canada, remains strong. These two provinces maintain that the current regime, with a largely harmonized set of regulations but separate regulators in each province and territory that collaborate through the “Passport System,” strikes an appropriate balance between the need for harmonization and predictability across jurisdictions and the desire for expertise and flexibility to respond to issues particular to one jurisdiction.

Manitoba and Nova Scotia have also not chosen to join the Cooperative System to date.

The relatively new Alberta government recently declared its opposition to a single securities regulator. Although the new government had initially indicated it was “considering its options” with respect to securities regulation, Alberta Finance Minister Joe Ceci said earlier this year that the Alberta government believes that because of the structure of the Alberta economy, including the size and scope of the energy sector in Alberta, the province “deserves a unique regulator.”

In addition, the Quebec government has challenged the validity of the Cooperative System, directing a reference to the Quebec Court of Appeal in July 2015. The provincial government asked the court to weigh in on the constitutionality of the Cooperative System as outlined in the Memorandum of Understanding regarding the Cooperative System and to determine whether the CMSA exceeded the federal government’s authority to regulate trade and commerce.

Shortly after the new federal government was installed, the president and CEO of the Autorité des marchés financiers, Quebec’s securities regulator, authored op-eds in two national newspapers arguing against the Cooperative System and promoting the current system. The current system, he argued, involved “a high level of regulatory harmonization” and provided jurisdictions “the required flexibility to respond to local regulatory challenges effectively.”

In light of the new federal government’s relative silence and the continued opposition from two of the major Canadian capital markets jurisdictions, more and more observers are asking whether the federal government will push ahead with the Participating Jurisdictions to implement the Cooperative System.