Law Times

Page 10 March 5, 2018 • Law TiMes www.lawtimesnews.com Argument that current regime works the way it is A potential national securities regulator raises concerns BY DALE SMITH For Law Times O n March 22, the Supreme Court of Canada will hear the appeal on the Que- bec government's reference re- garding the attempt to create a voluntary new pan-Canadian securities regulatory body. Se- curities lawyers are expressing skepticism about the plan — even those who were initially in favour of a single national regu- lator. "When we started this pro- cess, we were keen to have one common securities regulator across Canada," says Barbara Hendrickson, CEO and founder of BAX Securities Law. However, her views have shifted. "At one time, everyone thought we really needed it," says Hendrickson. "Now that we look at the pro- posals, there's a lack of consis- tency of opinion as to if this is going to be an improvement or not." Hendrickson, a past co- chairperson of the Securities Law Committee of the Business Law section of the Canadian Bar Association, had made submis- sions asking for a common secu- rities regulator going back as far as 2007. She says the idea of a com- mon regulator originally ap- pealed to people because of the uniformity of legislation and the belief that a common regu- lator would be cheaper than the existing system, which uses a "passport" system for businesses that do business across different provinces in order to ensure that they are in compliance with the various different provincial se- curities laws. However, Hendrickson now has concerns with the problems she sees in the proposed federal and provincial legislation to cre- ate the single regulator, particu- larly because provinces will be able to get local rules exempted from the national law. "[The proposed legislation] looks like it's going to be pretty complicated and like there's the potential for carve-outs within the participants, and that doesn't even bring into consideration the jurisdictions that haven't opted in," she says. The federal government launched the Cooperative Capi- tal Markets Regulatory System in 2014, along with draft legisla- tion and regulations to create a common securities regulator. So far, Ontario, British Co- lumbia, Saskatchewan, New Brunswick, Prince Edward Is- land and the Yukon have opted into the CCMR framework. In July of 2015, the Capital Markets Authority Implementa- tion Organization was incorpo- rated on behalf of the participat- ing jurisdictions as an interim body to assist with the transition to the CCMR. James Boyle, founding part- ner of Boyle & Co. LLP in To- ronto, says many lawyers think that the current regulatory re- gime works the way it is and that lawyers and their clients can deal with inconsistencies in regula- tions across Canada the way they are. He says that from a market- compliance perspective, more regulators make more sense, compared with a single one. Boyle says those who are sup- porting a single regulator are in- stitutions such as banks. "Nothing about [a single reg- ulator] makes any sense from the point of view of entrepreneurs, small business people, business generally in Canada," says Boyle. He is particularly concerned that the rule-making authority granted to the provincial regula- tors has no oversight from their respective governments, which is why a single regulator is even more concerning to him. "It's the creation of an unac- countable regulatory body that's going to make its own rules, enforce its own rules and is self- funding," says Boyle. "That's just fundamentally inconsistent with the concept of how capital- ism works." In 2011, the Supreme Court of Canada ruled that the federal government could not unilater- ally impose a national securities regulator given that securities regulation belonged to the prov- inces. In the March 22 hearing, the SCC will weigh in on the Que- bec Court of Appeal decision that the Constitution does not authorize the regulation in the proposed CCMR and that the most recent version of the draft implementation legislation does not exceed the authority of Par- liament, with the exception of three clauses contained within it. Boyle says he hopes that the Supreme Court of Canada real- izes that its 2011 decision was correct and that it will close the remaining avenues that the fed- eral government used to create the CCMR. Hendrickson says the ques- tion arising from the 2011 Su- preme Court of Canada judg- ment on this issue was what jurisdiction the federal govern- ment does have in this area. "The federal government has carved out this space in the area of systemic risk, and I know having participated in many submissions on this legisla- tion, it's not entirely clear what that means in the context of the current securities regime," says Hendrickson. FOCUS James Boyle says he hopes the Supreme Court of Canada will close the remain- ing avenues the federal government used to create the Cooperative Capital Markets Regulatory System. See Skepticism, page 12 © 2018 Thomson Reuters Canada Limited 00248QU-90627-NP PERSONAL INJURY PRACTICAL GUIDANCE The how-to toolkit on personal injury matters. Now on Litigator. Visit westlawnextcanada.com/personal-injury to access sample checklists, practice notes, and more.

• Cover