Important Developments Toward Reform Of Canada’s Securities Regulatory Regime

The Council of Ministers of the jurisdictions participating in the development of the Cooperative Capital Markets Regulatory System (CCMR) announced last week on April 16, 2015 important developments toward the reform of Canada's capital markets regulatory regime. In a largely symbolic move, Yukon executed the Memorandum of Agreement Regarding the Cooperative Capital Markets Regulatory System, and joins the governments of Canada, Ontario, British Columbia, Saskatchewan and New Brunswick in this largely provincially-led initiative. The Memorandum of Agreement was amended to accommodate the addition of the Canadian territories to the Cooperative system, and now provides for the maintenance of an office of the Capital Markets Regulatory Authority (the "Authority") in each territory. In addition, the Ministers announced the appointment of members of the nominating committee that will recommend candidates for the initial board of directors of the Authority, and indicated that the complete draft legislative regime - including draft initial regulations - will be made available for comment in the summer of 2015. These developments follow the submission of more than 60 comment letters from interested parties on the Memorandum of Agreement itself and on the two pieces of draft consultation legislation that CCMR released on September 8, 2014, namely, the provincial Capital Markets Act and the federal Capital Markets Stability Act.

The goal of the CCMR is to eliminate the inefficiencies that are endemic to Canada's current system of 13 separate securities agencies. The CCMR reflects the federal government's response to the 2011 Supreme Court of Canada decision in Reference Re Securities Act, 2011 SCC 66, which held that the federal government's first attempt to enact federal legislation to establish a national securities regulator was unconstitutional. As a result, rather than being pursued as a federal initiative, the provinces have largely taken the lead with the support of the federal government. To date, the provinces that have signed on to the CCMR represent approximately three-quarters of Canadian listed companies, with a market capitalization of almost 53%. However, staunch opposition to the Cooperative System remains, as Quebec and Alberta have continued to propose their own provincially-based models for securities regulatory reform.

On September 8, 2014, the Ministers released consultation drafts of uniform provincial and territorial capital...