OTTAWA (Reuters) - A Canadian provincial court ruled on Tuesday against the federal government’s plan to create a national securities regulator, the latest of several setbacks for Ottawa on the issue.
Finance Minister Jim Flaherty unveiled a draft law in May last year to set up a single national regulator to replace the 13 provincial and territorial watchdogs that now oversee regional capital markets.
Alberta and Quebec are the two most vocal provincial opponents of the plan, saying it would usurp their authority. They have both filed lawsuits against the federal government. The Alberta Court of Appeal issued its ruling on Tuesday.
“In conclusion, the proposed federal securities legislation represents the intrusion of the federal government into an area long occupied by the provincial governments,” the court said in its decision.
Flaherty, for his part, has asked the Supreme Court of Canada to rule on whether the federal government has the constitutional power to act on securities issues. A ruling is expected this year and Flaherty has said he’d like to put a new system in place in 2012.
The Alberta court recommended that Ottawa negotiate an agreement with provincial governments rather than seek an expansion of its power through a judicial ruling.
Ottawa argues a single regulator would reduce compliance costs for foreign investors, help crack down on white collar crime and bring Canada more in line with international standards.
Under Flaherty’s proposal, provinces could opt out of the new system if they wish, but analysts say they would be at a competitive disadvantage if they did so.
Last month, the British Columbia government dealt a blow to Ottawa’s plans by filing a legal brief with the Supreme Court in support of the lawsuits by Alberta and Quebec.
(The Court of Appeal of Alberta, Docket: 1003-0031-AC)
Reporting by Louise Egan; editing by Rob Wilson