Examining the Proposed Cooperative Capital Markets Regulatory System

Nov. 3, 2014


The Provincial Ministers responsible for securities regulation in British Columbia, Ontario, Saskatchewan and New Brunswick and the Minister of Finance Canada released a memorandum of agreement (MOA) on September 8, 2014, setting out the terms and conditions to establish a Cooperative Capital Markets Regulatory System (Cooperative System). On October 9, 2014, PEI signed onto the MOA. Consultation drafts of the proposed provincial and federal legislation that are key elements of the legislative framework for the Cooperative System were also released for public comment until November 7, 2014 (since extended to December 8, 2014). 

On November 3, 2014, the Centre for the Legal Profession (CLP) hosted a Conference entitled: “Examining the Proposed Cooperative Capital Markets Regulatory System.” The Program consisted of a panel discussion with opening comments from Professor Edward Iacobucci, Incoming Dean of the Faculty of Law at the University of Toronto, and Professor Anita Anand, Academic Director of the CLP. 

The panel discussion began with an overview of the Cooperative System and a presentation on the consultation draft of the provincial Capital Markets Act (PCMA). Colin Nickerson, Director of the Securities Reform Policy Branch for the Ontario Ministry of Finance, provided the overview on the proposed Cooperative System, stating that it would feature a uniform PCMA that would be proposed for adoption by each participating province and complementary federal legislation that would be proposed for adoption by Parliament. The Cooperative System would be overseen by a Council of Ministers consisting of the Minister responsible for capital markets regulation in each participating province and the Minister of Finance of Canada. A single, operationally independent Capital Markets Regulatory Authority (CMRA) would be empowered to administer both the provincial and federal legislation, and a single set of regulations. The CMRA would be directed by an expert board of directors and include a Regulatory Division and a separate adjudicative Tribunal. There would be a nationally integrated executive management team. Each participating province would have an office, with the executive head office in Toronto. Mr. Nickerson stated that the proposed structure would provide the benefits of consistent, cohesive, and timely regulation. Finally, Mr. Nickerson noted that the proposed structure would preserve the elements of the current system that work well and offer the flexibility that is required to respond to the fast-paced world of today’s capital markets.

Following Mr. Nickerson, Patrick Rundans, Counsel for the Legal Services Branch of the Ontario Ministry of Finance, offered an overview of the consultation draft of the PCMA. The discussion centered on the key components of the PCMA, identifying the parts of the PCMA that are largely consistent with current provincial legislation, such as the framework for recognized entities, registration and prospectus requirements, and also flagging notable provisions and parts that are new or different, including the platform approach to certain parts of the Act (e.g., take-over and issuer bids), new market conduct provisions, and new investor protection and evidence gathering tools. Mr. Rundans also provided an overview of the approach to derivatives regulation under the PCMA. The presentation concluded with a discussion of the next steps in developing the draft PCMA and related work to develop the draft initial regulations under the PCMA. 

Patricia Olasker, Partner at Davies Ward Phillips & Vineberg, then discussed potential issues associated with the proposed system. These issues included the need for continuity between the old system and the new and the need for interface with non-participating provinces so as to avoid a myriad of competing systems within Canada. 

The discussion turned to the federal Capital Markets Stability Act (CMSA) where Wayne Foster, a Director at the Department of Finance Canada, stated that the Cooperative System will leverage capital markets expertise across Canada. Joan Monahan, General Counsel for the Department of Finance Canada, then stated that the purpose of the CMSA is to promote and protect the stability and integrity of the financial system while also enforcing criminal law regarding securities. Ms. Monahan went on to comment how the CMSA would provide the federal government with broader powers regarding data collection that will improve the ability of authorities to identify systemic risks. Ms. Monahan also clarified that the CMSA’s objectives will be furthered by the addition of new evidence gathering tools, which will facilitate criminal investigations into capital market offences. Finally, Kelley McKinnon, a Partner of Gowlings, mirrored Ms. Monahan’s comments regarding the CMSA’s objectives and further offered that she believes the discussion surrounding the CMRA is positive and that the new structure is a sign of progress for capital markets regulation in Canada.

The program agenda can be downloaded here.