What’s the impact of the Supreme Court’s national securities regulator ruling?
Patrick J. Monahan, vice-president Academic and Provost at York University in Toronto, has written extensively on constitutional reform and public policy. He will take questions about the Supreme Court’s ruling.
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Patrick J. Monahan, an expert on constitutional reform and public policy will join us online from 3 to 3:30 p.m. ET to take your questions on today's ruling. Send us a comment to submit a question before we begin.
Here's what happened earlier today:
Reporter Bill Curry writes: Finance Minister Jim Flaherty says Canada will not move ahead with its proposed Securities Act in light of the Supreme Court of Canada's decision to declare it unconstitutional.
“We have the decision and we will respect it. It is clear we cannot proceed with this legislation,” said Mr. Flaherty in a brief statement circulated by his office. “We will review the decision carefully and act in accordance with it.”
The Supreme Court unanimously declared the proposed Act unconstitutional, siding with provinces that insisted the day-to-day regulation of securities markets does not belong in federal hands.
Mr. Flaherty had asked for the court’s opinion on the constitutionality of the proposed law, arguing that the lack of a uniform national body to regulate securities trading was a glaring weakness in Canada’s financial system.
Read more in a full story here: Ottawa will not go ahead with securities plan: Flaherty
Read an explainer by Streetwise writer Tim Kiladze here: Explaining the Supreme Court’s national regulator ruling -
Read a new opinion column by Patrick J. Monahan: Securities reform goes back to the drawing board
He writes: "The policy case for a single regulator is overwhelming. Public companies nearly always raise capital in multiple provinces; most securities are purchased by large institutional investors who like to diversify their holdings by owning investments in a variety of industries, from a variety of regions and, indeed, from a variety of countries; and securities are sold to buyers in multiple provinces (and countries)."
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Claire I think we need to wait to see a signal from Finance Minister Flaherty as to how he wants to proceed. Basically, is he going to try to develop an alternative proposal, or is he just going to abandon the project entirely? We may not get an answer to that question until January. -
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I would hope that the next step is for the federal government to look seriously at establishing a National securities enforcement agency that would have overall responsibility to police the Canadian markets and to work co-operatively with international enforcement efforts.
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Joe I agree that this would be a good first step. However the issue is what are the rules that the agency would enforce. The Supreme Court has said that the proposed scheme won't work and so we need to get a new framework in place before we can have an effective enforcement scheme.
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There are also local stock markets in Montreal and Vancouver that are seen as important economic contributors. There is a fear that these markets might be threatened by a national regulator. I don't think that would actually be the case but that is a real fear out there.
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What we have learned from the financial crisis in 2008 is that global financial markets are totally interdependent. A default in home mortgages in Arizona can cause a bank in Iceland to fail. So what we see is a need for much more comprehensive forms of regulation, at the national and indeed international level. That is a key reason why this reform is essential.
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Patrick ; the rules would be mostly the existing ones ;in the Criminal code and the CBCA together with a new set of market integrity rules based on the systemic risk analysis in today's decision .The Competition Act with its blend of powers would be a good model for a place to start. Who really cares who licences brokers as long as they are honest ? Joe
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Joe the Supreme Court spoke very generally about the need to have rules to protect "market integrity" but the analysis as quite vague and difficult to figure out. But your suggestion is certainly one option that I expect Mr Flaherty and his team will want to consider as they assess what can be salvaged after today's decision.
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If I am correct, the Supreme Court has said that a more cooperative model for getting provinces to come together to regulate nationally is in order. What evidence is there that the provinces would do so voluntarily? Isn't the reason that nothing has been done before is that self-interest has ruled the day?
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Darryl I agree with you entirely. It is wishful thinking to suppose that the provinces will voluntarily agree to give up their jurisdiction, particularly in light of their total victory at the SCC today. That is why I believe it is essential that the federal government come up with an alternative scheme that can function effectively without provincial buy-in, and proceed with it. That will then provide the context for a "coalition of the willing provinces" to emerge.
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Actually the Court always says that in its constitutional decisions, but the reality is that judges are practical people who do take into account what works and what doesn't. The judges were just not persuaded that a continued reliance on provincial regulation had become outdated in the modern global context. I think that decision was surprising, and disappointing, but I have no doubt that it did reflect their judgment on efficacy.
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I am often struck that in important cases the Supreme Court often rules unanimously. This uniformity seems to me to demonstrate a lack of breadth on the Court. Obviously, the Federal government felt it had a solid case. How is it that in a decision like this there is not one dissenting judge? Does this concern you?
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The Court strives for unanimity in controversial cases in order to present a "united front" and have judgments issued by "The Court". I have no doubt that there must have been internal controversy and debate within the Court, but I expect the Chief Justice would have worked very hard to get her colleagues to sign on to a single joint opinion. I think this is generally a good practice since it allows the Court to speak with a single voice.
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I think the only other comment I would make is how surprising the decision was today. In high profile cases like this in the past, the Supreme Court has usually found a way to allow the federal government to proceed with its policy initiative. That goes back to the federal wage and price controls policy in the 1970's, and the patriation proposals in 1981. This time the Court said a clear "NO", and that was a real surprise.
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