The Alberta government is floating a new proposal to revamp Canada's splintered securities regulation, suggesting that new national bodies should be created to handle enforcement and systemic risk, while the provincial securities commissions remain in existence and keep their control over other regulatory issues.
Alberta Finance Minister Doug Horner told The Globe and Mail that he has sent his ideas to Ottawa and the other provinces, but will announce them publicly in a speech in Toronto on Thursday.
Under the proposal, there would be a national enforcement agency and an associated quasi-judicial tribunal to rule on criminal code violations or other serious securities issues. A separate, formal, systemic risk committee would be chaired by the federal Finance Minister to address the concerns that systemic risk requires national oversight.
Existing provincial securities commissions would still handle local regulatory issues, and perhaps deal with securities violations that are limited to activity in that province.
"There should be a national securities enforcement agency, and we are not averse to that being in Toronto," Mr. Horner said in an interview. "We should have an adjudicative tribunal that covers national issues, and we are not averse to that being [in Toronto] as well."
Existing provincial agencies, such as the Alberta Securities Commission, "would do enforcement on regulatory matters that were only a provincial issue."
The new plan is an alternative to the current federal proposal, which is essentially a co-operative system where the provinces would jointly run a new securities regulator to be based in Toronto but with offices in all participating provinces. Only British Columbia and Ontario have agreed to that model so far.
Mr. Horner said the federal model has so little support among the provinces that it doesn't make sense to go down that particular road. "You have Ontario, B.C. and the federal government talking about a whole new different system that Alberta, Manitoba, Saskatchewan, Quebec have not signed on to. Our concern is that we are going to be even more fragmented after this if we don't come to terms and come up with something that is national."
Ottawa has said its key concern is the need for consistent enforcement, Mr. Horner said, and the Alberta proposal addresses this in a simple manner. "If that is the issue, then let's have a national securities enforcement agency."
A spokeswoman for Ontario's Finance Minister Charles Sousa said: "We have received [the Alberta proposal] and we're looking at it, as we do all proposals. But bottom line is, we're focused on fixing securities regulation as it stands."
In the notes for his speech to the Economic Club of Canada Thursday, Mr. Horner said Ottawa's current plan concerns him because "it gives the federal government powers far beyond their constitutional authority." Alberta's worry, he said, is that "Ottawa will proceed with consultations without the support of Alberta and Quebec."
Mr. Horner noted that the Supreme Court of Canada has ruled that day-to-day securities regulation is a provincial jurisdiction.
In December, 2011, the Supreme Court said Ottawa's proposed legislation to create a national regulator was unconstitutional because regulation of securities markets does not belong in federal hands.
Jim Flaherty, who was then finance minister, shifted his approach to try develop a co-operative system where the provinces would essentially opt in to a centrally-run system.
Canada is the only major industrialized country without a single securities regulator. Because of the 13 separate provincial and territorial regulators, many businesses have become frustrated with the duplicative red tape.