Supreme Court Hearing Leaves Cooperative Capital Markets Regulatory System in Limbo

The Supreme Court of Canada’s recent hearing on the constitutionality of the proposed cooperative capital markets regulatory system (Cooperative System) has thrown a wrench into the implementation of the Cooperative System.

The Supreme Court recently heard an appeal from the Quebec Court of Appeal’s ruling last spring that the Cooperative System is unconstitutional in significant respects. For more information please see our May 2017 Blakes Bulletin: National Securities Regulator on the Ropes? Quebec Court of Appeal Rules Proposed Cooperative System Unconstitutional.

Under the Cooperative System, a single regulator – the Capital Markets Authority (Authority) – would receive delegated powers from the federal government and the governments of Ontario, British Columbia, Saskatchewan, New Brunswick, Prince Edward Island and the Yukon (Participating Jurisdictions) to administer the proposed federal Capital Markets Stability Act (CMSA) and a uniform Capital Markets Act (CMA) that would be adopted by all participating provinces and territories in the Cooperative System to replace their respective current Securities Acts.


The last published implementation timeline was released in July 2016, prior to the Quebec Court of Appeal ruling. At the time, the Participating Jurisdictions proposed to adopt the CMSA and the respective CMAs by June 2018, and the Authority was expected to be operational in 2018. However, nearly two years have passed since the most recent consultation drafts of the proposed CMSA and CMA were released. The Participating Jurisdictions have established the Capital Markets Authority Implementation Organization (CMAIO) to prepare for the implementation of and transition to the Cooperative System.

The CMAIO has advised that although there have not been announcements related to a revised implementation timeline, the Participating Jurisdictions were continuing their planning and expected to release a revised timeline later this year.


For nearly two years, there has been no publicly disclosed progress on the structure of the Cooperative System or the necessary legislation and regulations.

Consultation drafts of the CMA and certain regulations proposed to be adopted thereunder were released for public comment in 2015. A consultation draft of the CMSA was initially released for comment in 2014, and a revised draft was released in July 2016. More than 50 comment letters were submitted on the CMA and associated regulations, and nearly 30 comment letters were submitted on the 2016 revised consultation draft of the CMSA (see our March 2016 Blakes Bulletin: New Capital Markets Regulator: Extent of Consultation and CMA Provisions Remain of Concern). However, no new drafts and no responses to the comments have been released.

In addition, the Participating Jurisdictions have not provided any detail on the proposed interface between the Authority and the securities regulators in the non-participating jurisdictions of Canada. An effective interface with non-participating jurisdictions is vital to the success of the Cooperative System, as some of the most commonly cited benefits of the Cooperative System are enhanced regulatory harmonization and reduced regulatory complexity. Through the “Passport System,” securities regulation in Canada has been harmonized to a considerable degree and if the Cooperative System does not provide at least that level of harmonization and simplicity, strong opposition is to be expected.


Since the Quebec Court of Appeal decision, no additional jurisdictions have signed up to the Cooperative System. In its recent budget, the government of Nova Scotia indicated that it expected to join the Cooperative System in the 2018-2019 fiscal year; however, it has not yet signed on to the system.

In addition, following a provincial general election, a new government took power in British Columbia in July 2017. The Financial and Corporate Sector Policy branch of the B.C. Ministry of Finance has indicated that, despite the change in government, B.C. remained committed to developing the Cooperative System and that, although no new jurisdictions have signed on to the Cooperative System, discussions at the political level between the Participating Jurisdictions and other jurisdictions were ongoing.


The Supreme Court’s decision in the appeal will determine whether the Cooperative System is a viable structure for securities regulation across Canada. If the Supreme Court overturns the Quebec Court of Appeal’s decision and determines that the Cooperative System respects the constitutional division of powers, then a flurry of activity can be expected as the Participating Jurisdictions and other stakeholders work toward finalizing the structure of the Cooperative System.

Blakes has published a series of Bulletins regarding various aspects of the Cooperative System and summarizing comments received on the drafts of the CMSA, the CMA and the CMA regulations (please see our various Bulletins posted on our website).

For further information, please contact:

John Tuzyk                   416-863-2918

Liam Churchill                416-863-3057

or any other member of our Capital Markets group.

Blakes and Blakes Business Class communications are intended for informational purposes only and do not constitute legal advice or an opinion on any issue.

We would be pleased to provide additional details or advice about specific situations if desired.

For permission to reprint articles, please contact the Blakes Client Relations & Marketing Department at © 2019 Blake, Cassels & Graydon LLP