Skip to main content

The federal government is bracing for a showdown in the Supreme Court of Canada, where it will square off against three provinces staunchly opposed to its plans to create a national securities regulator.

Every province, with the exception of Newfoundland and Labrador, has filed an application with the top court, seeking to participate in the two-day hearing next April. Ontario was the last to do so, filing its notice on Tuesday's deadline.

Intervenor application will allow the provinces to participate in the hearing, where the federal government will attempt to secure a ruling that it has the constitutional authority to create a single regulator.

Alberta, Manitoba and Quebec each plan to voice their strong objections to a national agency, to be known as the Canadian Securities Regulatory Authority.

"We've consulted with the financial industry in this province, and they're happy with the [current]system," Manitoba Finance Minister Rosann Wowchuk said Wednesday. "We do not believe a centralized regulatory system will be beneficial to our province."

Cat:e528746c-3414-401a-b14b-50247e3bdf01Forum:d0fa4e14-88d2-41f9-8a19-896bdff9544b

Ontario and British Columbia have both been supportive of the single-regulator initiative, but have made no formal commitment to participate. Other provinces have not tipped their hands, despite efforts by the federal government to woo them.

Securities industry sources said many provinces would not support a national agency based in Toronto. The transition office set up by the federal government is suggesting that the agency have no centralized head office, despite Ontario Premier Dalton McGuinty's insistence that it must be in Toronto, home to Canada's major industry players.

Matthew Mendelsohn, director of the Mowat Centre, a public-policy research group at the University of Toronto, said the Harper government runs the risk of allowing politics to trump policy by not having a head office.

"I do think, historically, the federal government has taken Toronto and Ontario for granted, and it has to start paying more attention to the long-term interests of Ontario generally and Toronto specifically," he said.

B.C. Finance Minister Colin Hansen said many companies now have executive teams dispersed in different locations, and there is no problem having strong co-ordinated leadership.

"I don't think it compromises the effectiveness of an organization at all," he said in an interview.

Toronto-Dominion Bank chief executive officer Ed Clark said Wednesday he supports having a national regulator based in Toronto, but believes the proposal to not have a head office is a necessary concession to win provincial support.

Mr. Clark said federal Finance Minister Jim Flaherty "is trying to play a reasonably sophisticated game" to accommodate the provinces. "So you create multiple offices and it turns out 85 per cent of the work is in Toronto and you'll find 85 per cent of the people in Toronto," he said.

New Brunswick and PEI are also leaning toward supporting a national regulator. New Brunswick plans to seek assurances during the hearing that jobs will be protected for the province's 40 employees in securities regulation, Finance Department spokesman Marc Belliveau said Wednesday.

"We were at the table from the get-go on this, and said we understand the need for a national regulator, but there are some conditions," Mr. Belliveau said. "It's not blanket approval."

An official in PEI's Department of Justice said the province is open to a national securities regulator "if that turns out to be in the best interests of our province and our island investors."

Graeme Mitchell, director of the constitutional law branch of Saskatchewan's Department of Justice, said the province's application to the high court takes no position on the national regulator. "We're just filing to protect our interests at the moment," he said.

In addition to nine provinces seeking intervenor status in the Supreme Court case, seven industry and shareholder groups have also applied for the right to appear at the hearing.

The Canadian Coalition for Good Governance, which represents investors with assets totalling $1.4-trillion, has sought intervenor status to argue in favour of proposals that would give the new national regulator greater investigative and enforcement powers, executive director Stephen Griggs said.

"We want to continue to keep the pressure up to make sure that we have a proper enforcement system in Canada," he said in an interview.

The Ontario Teachers' Pension Plan, which manages $96-billion in assets for the province's teachers, says in its application that the proposed national regulator would replace the country's "fragmented provincially-based regime with a consistent and competitive federal regime."

The Quebec-based shareholder rights group Mouvement d'éducation et de défense des actionnaires, or MEDAC, also has sought intervenor status, saying it strongly opposes the intrusion into the constitutional rights of provinces to regulate the securities sector.



Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe