Françoise Bertrand is president and CEO of the Fédération des chambres de commerce du Québec.
Opposition to the idea of a pan-Canadian securities commission is nothing new. As a result of the strong opposition among the provinces, former federal finance minister Jim Flaherty submitted his bill to the Supreme Court of Canada one week after its presentation in 2010. The following year, the Supreme Court ruled unanimously that the federal bill aimed at creating a pan-Canadian commission was unconstitutional in its form at the time, and that it encroached on provincial jurisdiction.
"The preservation of capital markets and the maintenance of Canada's financial stability … do not justify a wholesale takeover of the regulation of the securities industry," the country's highest court stated. The courts of appeal of Quebec and Alberta also deemed the bill unconstitutional.
It's surprising, therefore, to see another federal government entertaining the idea of creating a national securities regulator. It's difficult to understand the motivation for reforming the current system, which, in addition to working well, is flexible and allows the provinces to have laws and approaches that enable them to adjust and co-ordinate with one another, co-operating through a passport system that lets them maintain control over regional economic issues. The passport system is just as effective as a single commission in eliminating administrative task overlap.
Businesses and citizens that use the current system are satisfied with the securities management process in Quebec and the rest of Canada. It would be irresponsible and harmful to reject this system, which proves its effectiveness on a daily basis. One cannot help but wonder, given the performance of the current system, whether the idea and need for a national commission is being artificially created by Ottawa.
If Finance Minister Bill Morneau maintains his support for revisiting this bad idea put forth by his predecessor, he will have to explain how a single Canada-wide regulator would provide better protection for investors when several provinces, including Quebec and Alberta, do not wish to participate. He will have to show us how business communities will receive the same level of service as they do in the current system. He will have to show how this new plan will not harm Canada's financial sector in the long term, and how it will not create turbulence in the markets. It must also respond to criticism from across the country aimed at the basic pitfalls of the proposed regulations.
The transfer of decision-making positions and expertise outside of Quebec will also have serious consequences on our economy. The financial sector is extremely important to Quebec's economic vitality and is responsible for thousands of high-quality jobs. It's essential that the regulatory framework for securities remains here.
Quebec was the first province to contest the federal bill – though not the only one – and must continue to strongly oppose it. Quebec's position has always been that the regulation of securities is strictly under provincial jurisdiction and that greater centralization of decisions and expertise would be harmful to regional capital markets. The current regulatory framework for securities, with its provincial laws and commissions, meets the needs of Quebec's economy much more effectively than a single Canadian commission that would apply a single law for all of the provinces.
If the federal government persists in its ambitions, it must not demolish the current system in favour of a national commission, but rather seek the co-operation of the provinces to improve on what currently exists.