By 2015, B.C. may no longer have its own securities regulator.
B.C. and Ontario signed an agreement-in-principle with the federal government September 19 to create a joint securities regulator overseeing both markets.
The move is hoped to be a first step in creating a single national securities regulator administering a single set of regulations across the country. While B.C. and Ontario have signed up first, the federal government is hoping others will decide to join the "co-operative system."
Under the agreement, the regulator will be headquartered in Toronto, but regulatory offices will exist in every province that is part of the regime. Each regional office will continue to provide the same services it does today with local decision-making authority guided by national standards.
The move has the potential to vastly improve enforcement of securities laws in the country, which have been hampered by the country's existing system of provincially regulated securities markets.
Stu Morrow, a Vancouver partner at Davis LLP, said, "On the question of prosecution of civil frauds, could that be more effectively done on a co-ordinated basis by one federal agency? Yes, I think everybody agrees that would occur and it would be beneficial in that respect, particularly in light of the ineffectiveness of the RCMP's Integrated Market Enforcement Team since it was set up 10 years ago."
But questions remain as to how the system will actually work, and much of the negotiation to create the new system is still to be done.
Iain Mant, a Vancouver partner at Fasken Martineau, said, "If it's just an agreement in principle, then there will be a lot of heavy lifting to deal with on the mechanics and details of it."
As a next step, both B.C. and Ontario will be working on finalizing a formal agreement with Ottawa setting out the terms and conditions of the regulatory system by the end of January 2014. By next spring, draft regulations will be available for public comment and by June, integration of regulatory operations will begin.
If all goes according to plan, by December 2014, legislation will be enacted by each participating province and the federal government for the new regulator to be operational July 1, 2015.
While two of Canada's largest securities markets have signed on, "there is going to be some bumps and some friction working on this," said John Smith, Lawson Lundell's past managing partner in Vancouver.
Morrow noted the issue has been a fierce debate for over 50 years.
"It's not over yet."
