{"id":2023,"date":"2018-11-27T00:00:00","date_gmt":"2018-11-27T00:00:00","guid":{"rendered":"https:\/\/perlaw.ca\/2018\/11\/27\/canadas-supreme-court-clears-the-way-for-new-national\/"},"modified":"2019-07-18T15:21:17","modified_gmt":"2019-07-18T15:21:17","slug":"canadas-supreme-court-clears-way-for-new-national-securities-regulator","status":"publish","type":"post","link":"https:\/\/perlaw.ca\/fr\/2018\/11\/27\/canadas-supreme-court-clears-way-for-new-national-securities-regulator\/","title":{"rendered":"Canada\u2019s Supreme Court Clears the Way for New National Securities Regulator"},"content":{"rendered":"

On November 9, 2018 the Supreme Court of Canada (the \u201cSCC<\/strong>\u201d) released a highly anticipated decision about the Cooperative Capital Markets Regulatory System, the proposed pan-Canadian securities regulator. The SCC overturned the findings of the Quebec Court of Appeal, determining that the draft of the federal\u00a0Capital Markets Stability Act<\/em>\u00a0(\u201cCMSA<\/strong>\u201d)\u00a0and the model established by the most recent publication of the\u00a0Memorandum of Agreement regarding the Cooperative Capital Markets Regulatory System<\/em>\u00a0(\u201cMOA<\/strong>\u201d) were constitutionally sound.<\/p>\n

In September 2014, the Government of Canada, along with the Governments of the Provinces of British Columbia, New Brunswick, Ontario, Prince Edward Island and Saskatchewan, signed the MOA to formalize the terms and conditions of a new proposed cooperative capital markets regulatory system.\u00a0The Government of Yukon joined in April 2015. The MOA calls for the creation of a co-operative capital markets regulatory regime under the oversight of a national regulatory authority.<\/p>\n

Although the Province of Qu\u00e9bec had not signed the MOA, the Government of Qu\u00e9bec asked the Qu\u00e9bec Court of Appeal to rule on the constitutionality of the MOA and the CMSA.<\/p>\n

The Qu\u00e9bec Court of Appeal was asked two questions:<\/p>\n

    \n
  1. Does the Constitution of Canada authorize the implementation of pan-Canadian securities regulation under the authority of a single regulator, according to the model established by the most recent publication of the \u201cMemorandum of Agreement regarding the Cooperative Capital Markets Regulatory System<\/em>\u201d?<\/li>\n
  2. Does the most recent version of the draft of the federal \u201cCapital Markets Stability Act<\/em>\u201d (CMSA) exceed the authority of the Parliament of Canada over the general branch of the trade and commerce power under\u00a0subsection 91(2)\u00a0of the\u00a0CA?<\/li>\n<\/ol>\n

    The majority of the Qu\u00e9bec Court of Appeal answered the first question in the affirmative, and determined that the CMSA does not exceed the authority of Parliament, except for sections 76 to 79. The Attorneys General of Canada and B.C. appealed the decision to the SCC.<\/p>\n

    Question 1: Does the Constitution allow the implementation of the MOA?<\/strong><\/p>\n

    The SCC disagreed with the Qu\u00e9bec Court of Appeal on the first question, and determined that the MOA \u201cdoes not improperly fetter the legislatures\u2019 sovereignty, nor does it entail an impermissible delegation of law-making authority.\u201d<\/p>\n

    The Attorney General of Qu\u00e9bec took the position that the MOA violates the principle of parliamentary sovereignty because decisions reached by the Council of Ministers would have the effect of amending statutes passed by the provincial legislatures. The SCC held that this argument reflects a misunderstanding of parliamentary sovereignty: the principle, at its \u00a0most basic, means that a legislature has the right to make or unmake any law whatsoever (subject to constitutional limits). An executive-branch official cannot bind a legislature. It follows, then, that a decision of the Council of Ministers cannot per se affect any statutes passed by a legislature, and therefore cannot violate the principle of parliamentary sovereignty.<\/p>\n

    Question #2: Does the CMSA exceed the authority of the Parliament of Canada?<\/strong><\/p>\n

    The Court held that the CMSA<\/em> falls within Parliament\u2019s general trade and commerce power.\u00a0The Court disagreed with the majority of the Quebec Court of Appeal and held that the manner in which the CMSA<\/em> delegates the power to make regulations in sections 76 to 79 of the CMSA<\/em> have no impact on its constitutionality. The Court noted that provinces can and do regulate systemic risk in their capital markets. As such, the Court determined that the provinces, acting alone or in concert, cannot effectively address systemic national concerns which transcend their own respective concerns and the\u00a0CMSA<\/em>, with its carefully tailored scope, constitutes a response to this provincial incapacity, with Parliament stepping in to fill this constitutional gap.\u201d<\/p>\n

    Conclusion<\/strong><\/p>\n

    Canada is one of the only developed countries in the world that does not have a national regulator to oversee its capital markets. There has been a long effort to establish a national securities regulator, which has suffered a series of delays and roadblocks. This decision in\u00a0the Reference re Pan\u2011Canadian Securities Regulation <\/em>makes it clear that the Constitution allows the federal, provincial and territorial governments to work together to regulate securities trading under a single, unified system in Canada. Once the participating provinces finalize the new system it will bring a new era to securities regulation for businesses and capital market participants.<\/p>\n","protected":false},"excerpt":{"rendered":"

    On November 9, 2018 the Supreme Court of Canada (the \u201cSCC\u201d) released a highly anticipated decision about the Cooperative Capital Markets Regulatory System, the proposed pan-Canadian securities regulator. The SCC overturned the findings of the Quebec Court of Appeal, determining that the draft of the federal\u00a0Capital Markets Stability Act\u00a0(\u201cCMSA\u201d)\u00a0and the model established by the most […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"wds_primary_category":0,"wds_primary_expertise_area":0,"footnotes":""},"categories":[82],"tags":[],"class_list":["post-2023","post","type-post","status-publish","format-standard","hentry","category-publication"],"acf":[],"_links":{"self":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts\/2023","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/comments?post=2023"}],"version-history":[{"count":1,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts\/2023\/revisions"}],"predecessor-version":[{"id":2054,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/posts\/2023\/revisions\/2054"}],"wp:attachment":[{"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/media?parent=2023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/categories?post=2023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/perlaw.ca\/fr\/wp-json\/wp\/v2\/tags?post=2023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}