A single national securities regulator may be more efficient, but that won’t be enough to get Quebec on board, says constitutional expert Jean-François Gaudreault-DesBiens.
The professor of constitutional law at the Université de Montréal says many in the province see its regulator, the Autorité des Marchés Financiers, as the economic arm of the Quiet Revolution. As such, the AMF is seen as helping to create a new class of francophone business people in the 1960s and 1970s in Quebec. Gaudreault-DesBiens says efficiency will never be enough to trump Quebec identity.
“The AMF is perceived as a symbol and not only as a mere regulator that you look at from a purely functional perspective,” he says. “It is part of the Quiet Revolution, the economic side of the Quiet Revolution project. As such it has become a kind of a symbol.”
Retired Supreme Court of Canada justice John Major, who is an independent member of Alberta’s Securities Commission, says his province may line up with a national plan. The key of course is that a single national regulator would be better than what Alberta is doing now, and that an Ottawa-based regulator would be more efficient than the present system.
“There [are] not the same nationalistic considerations in Alberta as in Quebec,” Major says. “If it were a better system, I think Alberta would opt in, but there is considerable doubt that this is going to be a better system.
“From Alberta’s picture, when it was first suggested that the national regulator should be located in Ottawa, all you got to do is say that and you’ll squelch any idea of opting in.”
The two observations were part of a panel discussion hosted by York University’s Hennick Centre for Business and Law and Blake Cassels & Graydon LLP. Gaudreault-DesBiens told a packed audience he was only presenting Quebec’s objections and not his own.
However, he says despite having a provincial government friendly to Ottawa, the idea of letting a national organization having authority to advocate on behalf of Quebec in economic matters such as securities law, simply will not fly.
The debate has caught fire recently after the federal government created a transition office in June to begin working toward the single national securities regulator. That was followed by the announcement that members of all provinces and territories, other than Alberta, Manitoba, and Quebec, would be part of an advisory committee to help create the office.
The Quebec government announced it would be taking draft federal legislation to its Court of Appeal to argue whether Ottawa had the power to create such a national office. The federal government has since said it would send its legislation to the Supreme Court of Canada to get an opinion on its constitutionality.
During the recent panel discussion, Peter Hogg, considered by many as Canada’s pre-eminent constitutional expert, said he believes a federal securities act would be found to be constitutional. He cited the case of
General Motors of Canada Ltd. v. City National Leasing in pointing out the federal government would have the ability to enact a securities act through its general trade and commerce power.
In the case, General Motors argued the federal government was outside its legislative competence by initiating a civil action under the Combines Investigation Act — now the Competition Act — in an issue of price discrimination. GM said the civil action fell under provincial jurisdiction over property and civil rights. However, on appeal by the federal government — in which the provinces of Alberta, British Columbia, Saskatchewan, and Quebec intervened — the Supreme Court found the federal government had power over the general regulation of trade.
“The City National Leasing case would also authorize the Canadian securities act,” Hogg says. “[An act] that regulated not only interprovincial and international trading, but also the local matters that would be part of a single comprehensive national scheme under the oversight of a national securities regulator, I believe that the court will uphold that.”
Former British Columbia Securities Commission head Doug Hyndman, who was appointed in June to be chairman and chief executive officer of the Canadian securities regulator transition office, told those in attendance that he wasn’t there to partake in the constitutional debate. Rather, Hyndman says he is working on the presumption the federal government had authority to create a single national office.
“We are interested in the outcome of the discussion,” he says. “We are proceeding on the assumption the federal government does have the jurisdiction in this area. How far it goes and how it interacts with provincial jurisdiction is something the courts will tell us.”
Proponents of a nation regulatory system say it would be more efficient for companies wishing to list on Canadian markets, improve investigation and regulatory powers, and act as a single proponent for Canada abroad.
Opponents point to the effectiveness of harmonized securities law across the country, the passport system of allowing a single entry point to multiple provincial jurisdictions, and the potential for a new Ottawa-based system to be much slower than provincial reviewers as reasons to keep the status quo.
