The country's top court said Monday it will rule on the constitutionality of Ottawa regulating in an area that had previously been thought to be provincial territory.
The single regulator concept was championed by Finance Minister Jim Flaherty almost from the moment he took office in 2006, with Ontario initially the only ally. Following a lengthy study process, the minister was able win over a number of provinces.
But with Quebec, Alberta and Manitoba still firmly in the no camp, and British Columbia and Saskatchewan vacillating, Flaherty decided to seek a clear legal green light.
Federal Finance Minister Jim Flaherty backs the idea of a national securities regulator.(Canadian Press file photo)
The minister maintains a single regulator would be more effective in catching and prosecuting fraudsters.
"Those who commit securities fraud will face a tougher, more comprehensive regime. No more falling through the cracks," Flaherty said in the spring of 2010 when he announced plans to go to the court.
Ottawa's position has the backing of most national business groups as well as international bodies such as the Organization for Economic Co-operation and Development and the International Monetary Fund.
Opponents have noted that the presence of a single regulator in the United States did nothing to head off the subprime mortgage disaster that triggered a global recession in 2008.
Appeal courts in Quebec and Alberta have already ruled that Ottawa is treading on provincial jurisdiction with its proposed legislation.
But in a recent interview with The Canadian Press, Alberta Finance Minister Ron Liepert said his province would be willing to co-operate with Ottawa if the top court rules against the provincial position.
"At the end of the day, we've fought the battle, the court will rule and we live with it and move on," he said.
That does not mean every province will fall in line, however, and Quebec in particular has not softened its stance.
The current legislation does not require every province to join. The intention is to establish a national regulator and have as many provinces as possible "opt in," leaving the door open for others to follow.
Securities regulation in Canada is currently a fiefdom of the 10 provinces and three territories, although under the "passport" arrangement company documentation approved by one province is recognized by the others.
In arguments to the court in April, federal lawyers said securities trading is critical to the country's overall economy and hence is a national concern. Aside from the jurisdictional issue, opposing provinces argue that the current system of co-operation functions well and that Ottawa is trying to fix a problem that doesn't exist.
