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Is the Federal Government’s Proposed National Securities Regulator Constitutional?

Image from The Lawyers Weekly

The Supreme Court of Canada (SCC) will release its answer to this question tomorrow. The federal government posed the reference question to the court: is securities regulation subject to provincial or federal jurisdiction as set out by the Constitution Act, 1867?

The Constitution Act sets out the division of powers, which determines what issues are under the control of the provinces- like education health- and what things are governed by the federal government- such as criminal law and copyrights. In reality there is a lot of overlap between the two.

If securities regulation is a matter of “property and civil rights”, it is subject to provincial jurisdiction. If it is a matter of “trade and commerce”, it will fall within the domain of the federal government. 

Not all the provinces are happy with the idea of a nationwide securities regulator, which was proposed by Finance Minister Jim Flaherty in May 2010. In fact, Ontario seems to be the only province supporting the proposed system. Courts in Alberta and Quebec have already ruled that the proposed Act is constitutionally invalid.

Flaherty argues that not having a national regulator hurts Canada’s reputation internationally and that a single national regulator would fix the fractured system that currently exists. Critics have pointed out that a national regulator in the US failed to prevent the economic crisis of 2008.

I predict the SCC will rule that securities regulation falls within federal jurisdiction, and that a national securities regulator is therefore constitutional. This may ruffle some feathers, as provinces are loathe to cede power to the federal government, but there comes a time when politics should perhaps yield to what may be in the best interests of our country as a whole.


  1. I was wrong. The SCC declared the proposed Act unconstitutional.


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