Recent developments and conclusion

• Author: Christopher Nicholls
• Pages: 470-496

470

CHA PTER 12

RECENT DEVELOPMENTS

AND CONCLUSION

A. R ECENT DEV ELOPMENTS

There have been a number of important recent developments relating to

securities regulation, some of which have not been dealt with in other

chapters. This chapter will touch upon f‌ive of those developments:

• Ongoing efforts in the pursuit of a Cooperat ive Capital Markets

Regulatory System

• Proposals for Reform of Dealer and Advi ser Regulation, including a

proposed statutory or regulatory “B est Interest” Standard

• The inf‌luence of Behavioural Finance on Securities Reg ulation

• Shareholder Activism and Reg ulatory Initiatives relating to Proxy

Rules and Shareholder Voting

• Fintech and Regtech

1) Cooperative Capital Markets Regulatory System

The ongoing work toward developing a new national securities regu-

latory system is potentially the most signif‌icant development in Can-

adian securit ies regulation in over f‌ifty years. The current effort was

born out of the ashes of the federal government’s unsuccessful attempt

to create a truly national securities regul ator through federal legislation.

This bold initiative was halted by the Supreme Court of Canada in 2011.

The Court ruled that the proposed federal leg islation was beyond Par-

liament’s constitutional authority to enact legislation pursuant to the

Recent Developments and Conclusion 471

so-called “general branch” of the trade and commerce power in section

91(2) of the Constitution Act, 1867, while acknowledging th at at least

some aspects of securities regulation, such as national d ata collection

and systemic risk regulation, would certainly fall w ithin federal legisla-

tive author ity. The Supreme Court reference is discussed in Chapter 3.1

Following the Supreme Court’s decision, efforts to create a nationa l

system of capital market regulation did continue, although the nature

of the project necessarily cha nged. The reframed goal was twofold: to

create new federal legislation limited to those matters over which the

federal government clearly had legislative authority and providing for

the creation of a new capital market regul atory authority, with separate

regulatory and adjudicative div isions; and to seek the agreement of the

provinces and terr itories to implement a new uniform statute in each

participating provi nce and territory dealing with those capital ma rket

matters w ithin provi ncial legisl ative authority. The part icipating prov-

inces and territorie s would then delegate authority to the new capital

market regulatory authority created under the federal statute so that, if

every Canadi an province and territory were to eventually par ticipate in

the new system, the capital market regulatory authority would emerge

to become a single, national securities regulator.

The f‌irst step toward launching thi s new cooperative capital market

regulatory system occu rred on 19 September 2013, when an Agreement

in Principle was signed by t he federal government and the governments

of British Columbia and Ontar io.2 That Agreement in Principle provided

that the three participating governments, and any other provincial or

territorial governments that might wish to par ticipate in the future,

would work toward establishing a “cooperative capital markets reg u-

latory system.” The basic elements of the proposed cooperative capital

markets system outlined in t his agreement are simil ar to the structure

proposed in 2006 by the Craw ford Panel on a Single Canadian Secur-

ities Regulator.3 This model had also been an important pre-cursor to

the 2009 f‌inal report of the Expert Panel on Securitie s Regulation,4 the

report that immediately preceded the federal government’s ultimately

1 Reference re Securit ies Act, 2011 SCC 66.

2 Online: http://ccmr-ocrmc.ca /wp-content /uploads/2 014/04/CCMRWebSept19

AI PP DF.p df [Agreement in Pr inciple].

3 See Crawford Panel on a Si ngle Securities Regu lator, Blueprint for a Canadian

Securities Commiss ion: Final Paper (Toronto: Crawford Panel on a Single Securi-

ties Regulator, 2006).

4 Expert Panel on S ecurities Regulat ion, Creating an Advantage in Globa l Capital

Markets: Final Repor t and Recommendation s (Ottawa: Depa rtment of Finance,

2009), online: www.expertpanel.ca/eng/documents/E xpert_Panel_Final_

Report_ And_Re commendations .pdf.