The Supreme Court of Canada ruled against the federal government's plan to create a single, national securities regulator, forcing Ottawa to rethink its campaign to replace the current patchwork of provincial watchdogs and regulations.
Here are some of the reactions from politicians, regulators and other stakeholders to Thursday's court's ruling.
FINANCE MINISTER, JIM FLAHERTY:
We have the decision and we will respect it. It is clear we cannot proceed with this legislation. We will review the decision carefully and act in accordance with it.
QUEBEC FINANCE MINISTER RAYMOND BACHAND:
This is a victory of federalism against unilateralism.
MANITOBA FINANCE MINISTER STAN STRUTHERS:
It's better to regulate from Manitoba than from Bay Street
Struthers said Manitoba is willing to participate in talks with the federal government and provinces, but we would need to be sure the federal government is serious about sitting at the table and discussing these issues and not making decisions unilaterally.
HOWARD WETSTON, CHAIR OF THE ONTARIO SECURITIES COMMISSION:
The OSC will take the time to review today's decision of the Supreme Court of Canada. We remain focused on regulating Ontario's capital markets in the best interests of the province's investors and market participants.
With respect to national regulatory initiatives, we will continue to work with other provincial and territorial securities regulators.
BILL RICE, CHAIRMAN OF THE CANADIAN SECURITIES ADMINISTRATORS:
We welcome the clarity that the Supreme Court of Canada has now brought to the question of constitutional jurisdiction. The structure for future Canadian securities regulation has been in a state of uncertainty for the past couple of years.
It will be up to the provincial governments in Canada to determine the future structure of securities regulation in this country and the relationships that will exist among securities regulators.
TERRY CAMPBELL, CEO OF THE CANADIAN BANKERS ASSOCIATION:
We think real progress has been made here. The court has recognized, for the first time, that there is federal jurisdiction over securities. For the first time the court has said there can be a national securities regulator.
PATRICK MONAHAN, PROVOST AT YORK UNIVERSITY AND FORMER DEAN OF OSGOODE HALL LAW SCHOOL:
This is a huge setback for the (federal government) plan
If the federal-provincial co-operative could've worked I think it would've gotten there by now. I'm not sure it's going to do anything in the short term. If there was a further economic shock of some kind that would be - and we don't want that to happen - that might prompt political demand for action on this.
What interest do the provinces that oppose this have, why would they come to the table. There's nothing to require them to do so.
CARISSIMA MATHEN, A LAW PROFESSOR AT UNIVERSITY OF OTTAWA:
The big catchword I think, or the big point that the court was trying to make, was: get it together, co-operate on this, and don't make this into a rigid division of powers dispute.
A radically downsized law could be constitutional, but would it meet the objectives about which the government was quite explicit in the last year? Probably not.
ERMANNO PASCUTTO, EXECUTIVE DIRECTOR OF CANADIAN FOUNDATION FOR
ADVANCEMENT OF INVESTOR RIGHTS:
It is a setback, but not necessarily the end of the game.
The court has said there really needs to be a cooperative approach between Canada and the provinces because both have constitutional authority and neither has constitutional authority over everything.
The Supreme Court of Canada has said is that the federal government has jurisdiction in securities regulation in a number of areas like systemic stability, fair and efficient capital markets. But the provinces also have jurisdiction over basic securities registration, which includes things like licensing brokers and their conduct vis-a-vis their clients.
ANITA ANAND, ASSOCIATE PROFESSOR IN THE FACULTY OF LAW AT THE UNIVERSITY OF TORONTO
This is not the decision that supporters of a national securities regulatory system were seeking, from that perspective it's surprising and it's also notable that there were no dissenting judgments in the case, which means the court was unanimous in its approach, which is also surprising.
The Supreme Court carved out space for federal regulation in areas of national interest such as systemic risk. It is clear ... that they are sympathetic to the financial crisis argument that the federal government was making.
It's always open for the federal government to propose another statute that may be within the constitutional jurisdiction of the government of Canada.
The federal government has jurisdiction over criminal law. It already has in place some infrastructure relation for enforcement. I think there's some sympathy among the provinces to discuss this option. I think there is some possibility here to develop a national enforcement scheme.
IAN RUSSELL, CEO OF INVESTMENT INDUSTRY ASSOC. OF CANADA:
What this does is it sets the constitutional platform for us to move forward and actually build a national regulator for Canada which is essential for capital markets.
What I am talking about is building a single regulator co-operatively which is using both federal and provincial jurisdictions together.
STEVEN SALTERIO, BUSINESS PROFESSOR AT QUEEN'S UNIVERSITY:
The decision is expected but unfortunate.
We need a national securities regulator but it could never be constitutionally done solely by the federal government. I believe there should be a national securities enforcement body. What's the difference between a regulatory and enforcement organization? A national securities enforcement body would be a focused organization with the sole mandate to investigate and enforce the various multilateral and national securities laws and regulations that are in effect across Canada.
BILL HORTON, CHIEF INVESTMENT OFFICER AT MD PHYSICIAN SERVICES:
I think it's very positive in the sense that now we've got heightened awareness of the issues at hand so we don't have to wait around to figure out whether it's legal or not to have a national securities regulator because we've seen from the Supreme Court advisory that it's not constitutional.
But they're specifically are sending a message back to the government that there are other ways to accomplish this, and that they see there are parallels in other activities that provinces and the federal government engage in that will provide a method going forward of providing an enhanced system.
PHILIP ANISMAN, SECURITIES LAWYER:
What I would like to see is that the negotiations that I suspect have been going on with respect to the opting-in scheme in the legislation that was just rejected would continue, but be redirected toward the development of a federal-provincial cooperative scheme.