Ottawa to rethink federal regulator plan
By Randall Palmer
OTTAWA (Reuters) - Canada's top court derailed government plans to consolidate a patchwork system of provincial securities regulators on Thursday, ruling that proposed federal legislation violated provincial rights and forcing the government back to the drawing board.
The Supreme Court's surprise decision leaves Canada as the only major developed country without a national regulator.
"It is clear we cannot proceed with this legislation," Finance Minister Jim Flaherty said in a statement. "We will review the decision carefully and act in accordance with it."
Under the present system, each Canadian province has its own securities regulator, leading to awkward scenarios, like when the tiny Saskatchewan Financial Services Commission oversaw BHP Billiton's ultimately failed US$40 billion takeover offer for Saskatchewan's Potash Corp last year.
Flaherty, facing opposition from six provinces to his plans to replace that system, had asked the Supreme Court to weigh the legality of his proposals for a new national regulator.
The court said its ruling did not constitute an opinion on the best model to regulate the Canadian securities market, but simply reflected the text and principles of the constitution.
"The proposed federal act overreaches the legislative interest of the federal government," it said in a unanimous decision.
"As important as the preservation of capital markets and the maintenance of Canada's financial stability are, they do not justify a wholesale takeover of the regulation of the securities industry, which is the ultimate consequence of the proposed federal legislation." Continued...