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December 23, 2011

Supreme Court decision on national securities regulator: what it means for investors

On December 22, 2011, the Supreme Court of Canada unanimously found that the federal government's proposal for a national securities regulator does not fall within the legislative authority of the Parliament of Canada.

For investors, it is important to focus on the outcome of the regulatory process more than the structure of it. Canada's capital markets are largely well functioning. Provincial securities regulators have, over the last number of years, been working closely together through what is known as the "passport system" in which securities regulations are becoming more harmonized, and approval by one jurisdiction is recognized by others.

Our current system, therefore, is not "broken," though the Court did recognize that current provincial regulatory oversight is not best equipped to deal with such things as systemic risk. Our system can, therefore, be improved—and the Court, through dialogue with the government, is encouraging that in its written decision.

The Court has said that the federal government does not have the constitutional authority to create a national securities regulator—but nothing is preventing an improved system of securities regulation in Canada, and that is something all participants in the capital markets should welcome.

Supreme Court decision: BNN interview with Bill Horton, Chief Investment Officer, MD Physician Services