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The Globe and Mail

Flaherty sets one-year goal for national regulator plan

Canada's Finance Minister Jim Flaherty speaks to The Globe and Mail's editorial board, April 27, 2012, in Toronto. Mr. Flaherty wants a one-year deadline on establishing a national securities regulator.

Roger Hallett / The Globe and Mail/Roger Hallett / The Globe and Mail

Finance Minister Jim Flaherty has drawn a line in the sand for the first time in his for a national securities regulator, setting a one-year deadline before he walks away.

Mr. Flaherty has long fought for a national regulator, making it one of his signature goals since became finance minister. But he suffered a setback in December when the Supreme Court of Canada ruled such a plan would be unconstitutional by infringing on provincial independence.

Mr. Flaherty vowed to continue his quest for at least some form of a regulator, even if its mandate is not as far-reaching as the first proposal. On Friday, he said there is only a finite amount of time to strike a deal.

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"This can't go on forever," he told The Globe and Mail's editorial board, "so I think we need to either accomplish the goal through an agreement with the provinces, or abandon the idea."

The battle for a national securities regulator has run for more than three decades, and Mr. Flaherty said all the interested parties cannot continue to devote enormous resources to the push if plans remain in limbo. Ontario has long been on board, and there are signs the newly elected government in Alberta, another powerhouse, might support it. Citing this growing "critical mass," Mr. Flaherty believes the time to strike a deal is now, setting a year-long deadline.

Mr. Flaherty isn't the only person who has hopes of reviving the plans. Asked if he thought the dream was dead while speaking on a breakfast panel in January, Ontario Securities Commission chair Howard Wetston said: "I wouldn't put a bullet in it."

Canadian business leaders also support the revived push. At the time of the Supreme Court's ruling, they argued that the current patchwork of provincial regulators creates loopholes, unnecessary costs and inefficiencies – though they understood the ruling was based on legal, not practical, grounds.

When the Supreme Court reviewed the initial plans, the backers knew they had to prove the proposal was a matter of national importance and scope, distinct from provincial concerns. Ultimately, the court ruled that all aspects of trading and securities "cannot be described as a matter that is truly national in importance and scope making it qualitatively different from provincial concerns."

But it did leave a door open, noting that a national body could control some areas of regulation – particularly anything that could cause systemic economic risk.

In Mr. Flaherty's way stands Quebec, which has ardently fought for its regulatory independence, and Manitoba, which previously signalled displeasure with the national plan.

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