Capital Markets Regulatory Authority unveils board, maps out 2018 timeline

Capital Markets Regulatory Authority chair William Black

The nascent Capital Markets Regulatory Authority has unveiled its initial Board of Directors, led by chair William Black, and also announced a timeline for enacting a provincial-territorial Capital Markets Act along with its complementary federal Capital Markets Stability Act by June 30, 2018.
William Black, a recipient of the Order of Canada, was previously president and CEO of Halifax’s Maritime Life, whose 34-year career with that company saw it grow through four acquisitions to a size of 3,000 employees and $15 billion worth of assets under management.
From a pool of candidates supplied by an independent nominating committee, the Authority’s Board of Directors was selected by provincial ministers responsible for capital markets regulation represented by British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island and Yukon, as well as Canada’s Minister of Finance.
The Cooperative Capital Markets Regulatory System to be eventually implemented by those provinces is intended to foster more efficient and globally competitive capital markets in Canada, to facilitate the raising of capital from investors across Canada and also internationally, to provide increased protection for investors, to integrate perspectives from across Canada, to strengthen Canada’s capacity to identify and manage systemic risk on a national basis, and to enable Canada, through the single voice of a new cooperative capital markets regulator, to play a more empowered role internationally.
“The board of directors is a diverse group with capital markets expertise, including expertise in venture markets,” said B.C. Finance Minister Michael de Jong. “Under the leadership of the board of directors, the Capital Markets Regulatory Authority will contribute to more accessible capital markets, improved investor protection and heightened response to increasingly competitive, dynamic and global capital markets.”
Documentation relating to establishing the Cooperative Capital Markets Regulatory System dates back to September 2013, following a 2011 Supreme Court verdict ruling that the Securities Act drafted by the previous federal government is valid under the general branch of federal power to regulate trade and commerce under the Constitution.
At that time New Brunswick was petitioning that the division of powers regarding the scheme should fall under provincial power over property and civil rights, although it has since reversed course and thrown its support behind the Regulatory Authority.
Quebec and Alberta have already indicated that they will not be joining the regulator, with Quebec saying at the end of 2015 that it still intends a court challenge of the proposed regime, despite a message on the Authority’s website which reads, “The participating jurisdictions are inviting the governments of other provinces and territories to join the Cooperative System.”
The CRMA is basically consolidating six existing securities acts, along with newly created policies and regulations, into one.
“In my view, it’s mostly a clean up and harmonization,” said co-chairwoman of the Canadian Bar Association’s securities committee Barbara Hendrickson to Canadian Lawyer magazine in January. “There were things in here that people were looking to change for a while.”
Hendrickson added that Canada has been talking about creating a national securities regime since the 1960s and that this was simply a step towards that goal, and said, “Any harmonization is good.”
The governments of Canada, Ontario and British Columbia made clear early in 2014, in the wake of the 2011 Supreme Court verdict, that they would work to get the national regulator functioning by mid-2015.
But a draft put forward by the federal government was eventually released in August 2015, followed by a 120 day comment period, during which concerns were raised by the Investment Funds Institute of Canada, among others.
Back in 2014, over 60 comment letters were received from various stakeholders, including from the Canadian Bankers’ Association, Manulife Canada, the TMX Group, the Pension Investment Association of Canada, among others.
During the second phase of consultation, more than 50 additional comment letters were received.
While most comment letters welcomed the arrival of national harmonization, many pointed out the remaining challenges to doing so.
The Canadian Bankers Association writes that while “the banking industry has always been supportive of initiatives intended to unify and rationalize capital markets regulation across Canada,” they nevertheless “believe that market participants would benefit from an additional comment period once the entire regime has been proposed,” given “the magnitude of the proposed changes.”
A more recent comment letter from the Investment Industry Association of Canada also requests more clarity on a variety of issues, including how the Authority intends to deal with foreign capital market intermediaries, as well as “the designation of a class of securities or derivatives as systemically important under section 20, or the designation of a systemically risky practice under section 22.”
Given how much detail there is to sort out among the stakeholders, it will be interesting to see whether the Capital Markets Regulatory Authority can be fully operational by its intended 2018 target, and what the impact of significant jurisdictions remaining outside the framework, namely Alberta and Quebec, will be.
The 15 members of the Capital Markets Regulatory Authority’s initial Board of Directors are: