Federalism Is A Bitch: Canadian Securities Regulation Edition

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National securities regulators: Everyone's got one (or more). Everyone, that is, except Canada, which instead has 10 provincial securities regulators and three other territorial ones. Until the year after next, anyway, when the country will have one national securities regulator covering two of its three important provinces, eight provincial regulators and three territorial ones.

That is, of course, unless the third of Canada's three important provinces has something to say about it. Assuming that the least popular provincial government in Canadian history can hang on long enough to stop it.

The federal finance minister, Jim Flaherty, and his counterparts from Ontario and British Columbia unveiled details of the plan on Thursday. Together, Ontario and British Columbia are home to about two-thirds of the country's capital markets.

Canada has been criticized by the International Monetary Fund for being the only advanced economy without a national capital markets regulator.

The version of the plan revealed on Thursday is less ambitious than earlier efforts, but is designed to win over additional provinces before its 2015 launch. Still, the French-speaking province of Quebec, led by a separatist government, rejected the plan and hinted at fighting it in court….

"We will ask the Justice Ministry for a legal opinion to analyze the proposal that was announced this morning and we will not hesitate to go to court," said Alexandre Cloutier, Quebec minister for intergovernmental affairs….

"If there is only one regulator in Toronto the financial industry will concentrate there," Quebec Finance Minister Nicolas Marceau said.

Hard to quibble with any of that, except the tense. Canada's financial industry has concentrated in Toronto, thanks in no small part to Marceau's own party's policies making English-speaking bankers feel oh-so-welcome in Québec.

Canada to set up new market watchdog but scope limited [Reuters]
Canada to Set Up New Securities Regulator [DealBook]

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