OTTAWA (AFP) – Canada unveiled Thursday what it touted as the nation's first national securities regulator to replace a patchwork of regional watchdogs and rules, but only two of 10 provinces are onboard.
The new regulator will be headquartered in Toronto, the nation's financial hub, and will replace the securities commissions of Ontario and westernmost British Columbia provinces.
It is hoped that other provinces, which have long balked at giving up oversight of investor protections and capital raising in their respective jurisdictions, will eventually join the group.
"I do think this is an historic agreement," Finance Minister Jim Flaherty told a press conference, flanked by his Ontario and British Columbia counterparts.
"We expect that Canada, as a result of this agreement will attract more investment, our investors will have greater protection, and we'll have more effective prosecution of white-collar crimes," he said.
A single national securities regulator in Canada has been 70 years in the works.
Today's announcement comes two years after Ottawa abandoned its last proposal for a single national securities regulator.
That plan was endorsed by the International Monetary Fund, but was rejected by the Supreme Court as unconstitutional.
The federal government had argued that securities trading was no longer a local matter and had evolved to become "a matter of transcendent national concern."
It insisted that in order to compete, Canada needed to impose minimum standards applicable throughout the country to preserve the stability and integrity of its financial markets.
Opponents argued that the existing system of provincial watchdogs working together to ensure common national standards adequately protects investors and the economy.
The court acknowledged that "aspects of the securities market are national in scope and affect the country as a whole," but insisted that "day-to-day regulation" be left to the provinces.
It left the door open, however, for federal-provincial cooperation in regulating markets.
The new body sets up a rotating chair from each province and a board appointed by each.
Participating provinces will also enact identical securities legislation, with a complementary federal act addressing criminal matters.
And their fees will be standardized.