CMAIO presses pause on work toward a national securities regulator

Non-profit tasked to spearhead transition suspends operations, citing COVID challenges faced by concerned governments

CMAIO presses pause on work toward a national securities regulator

Canada’s plodding progress toward a single overarching capital markets regulatory authority (CMRA) has officially been put on hold thanks to the COVID-19 pandemic.

The Capital Markets Authority Implementation Organization (CMAIO), the non-profit organization created expressly to assist in Canada’s transition to and implementation of an operationally independent CMRA, publicized the decision to pause its operations effective March 31, 2021, through a low-key announcement on its website.

“The development of legislation to create the Cooperative Capital Markets Regulatory System (Cooperative System) has been delayed, as the participating governments take action to respond to the Covid-19 pandemic, prepare for economic recovery and implement reforms to provincial securities legislation,” CMAIO said.

Since it has accomplished all possible integration in consultation with participating governments and pending the necessary completed legislation, the organization said it is implementing an orderly pause of its operations, and has acted to preserve its existing knowledge, assets, and work product.

“CMAIO’s work can be resumed at a future time when there is greater certainty around Cooperative System launch timelines,” the organization said, highlighting its continued support for the establishment of the Cooperative System. “[We encourage] the participating governments to move ahead with the Cooperative System, which will provide significant benefits for Canada.”

The Portfolio Management Association of Canada (PMAC) issued a similar call in a statement following the news.

“The association is calling upon all levels of government and key stakeholders to make the necessary compromises to relaunch this critical initiative as part of the provincial and federal post-pandemic plans to restart the economy and position Canada’s capital markets for the future,” the association said, referencing its numerous past submissions to both federal and provincial governments calling for a national securities regulator.

Expressing disappointment at the decision, PMAC cited its long-held belief that Canada’s standing in the global capital markets can only be sustained and grown with a national securities regulatory system that harmonizes regulation across the country, maintains regional centres of excellence, and retains many effective elements of the current regulatory regime.

“We remain hopeful that as part of a post-pandemic pan-Canadian economic recovery plan, the provinces, territories and the federal government will see fit to relaunch this important initiative,” said PMAC President Katie Walmsley. “As the only G20 country without a national regulator, Canada needs to modernize on this front for the benefit of all Canadians.”

For its part, Quebec’s Finance Ministry welcomed the news.

“The news that the Capital Markets Authority Implementation Organization is suspending its activities is an opportunity to put an end to the project for a national securities regulator,” Quebec’s Finance Minister Eric Girard said in a statement.

The ministry asserted that the regulation of securities is the exclusive jurisdiction of the provinces, a position that it said has been confirmed by the Supreme Court of Canada on two occasions. A harmonized system of securities regulation, it added, has existed for several years in the form of the Passport System, which has been adopted by all provinces and territories except for Ontario.

“We invite the Ontario government to join the Passport System to effectively regulate securities in Canada and make our financial system even stronger,” Girard said.


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