Focus: Governments move on co-operative securities regulator

Bill Black is carrying a big weight on his shoulders these days.

Black, a Canadian businessman who is the former CEO of Maritime Life Insurance and sits on a number of corporate boards , is chairman of the board of directors of the Capital Markets Regulatory Authority, the body tasked with creating the Cooperative Capital Markets Regulatory System.

“It’s complicated, just the number of pieces you have to get together,” Black says of the efforts that are underway to create the new securities regulator.

The undertaking comprises the federal government, Ontario, British Columbia, Saskatchewan, PEI, New Brunswick and the Yukon, and stems from the Supreme Court of Canada’s rebuffing of the former Conservative government’s effort to create a national securities regulator.

The CCMRS is being designed to streamline Canada’s capital markets regulatory framework and reduce the byzantine system of 13 market overseers.

One of Black’s biggest challenges is that he’s been the chairman of a board for more than a year that, until recently, had yet to have any members appointed to it. This was holding up the rollout.

However, in late July, the participating governments finally agreed on 14 new members to the board. At the same time, it extended the timeline for the rollout to June 2018.

Originally, under the memorandum of understanding signed by the participating parties, the plan was to be operational by the fall of 2016 and the board was going to be smaller.

“Agreeing on a set of nominees can sometimes take quite a bit of time. It’s slower than anybody was expecting,” says Black, who has been on the job for just a little over a year now and has given few interviews over that time.

He agreed to speak to Law Times to address concerns raised by lawyers about the length of time it is taking to roll out the new regulator.

“Some of that has to do with the fact there was a transition in government,” he says, adding that “slowed things down.”

As well, the legislation setting things is still being developed.

The Capital Markets Stability Act, the federal legislation dealing with systemic risk, is not complete, nor is the Capital Markets Act, the legislation that will replace the provincial securities acts of the participating provinces. Also missing is the much-needed legislation that sets up how the authority will work and interact with non-participating markets.

As well, the new federal government’s support of the national regulator has been tepid at best. In January, Finance Minister Bill Morneau told reporters in Halifax during pre-budget consultation that “we do favour a collaborative national securities regulator.”

John Tuzyk, a lawyer at Blake Cassels & Graydon LLP, pointed out in a recent bulletin that the federal government has done little outside of that statement to indicate public support.

It wasn’t listed in the government’s top 25 priorities set out in the minister’s mandate letter from Prime Minister Justin Trudeau, nor was there much mention of it in the recent budget, prompting many to question the federal government’s commitment.

“There has been a dearth of public statements by the federal government and the minister of Finance,” said Tuzyk.

“They haven’t tabled the legislation which actually sets up the authority.”

“There is uncertainty, generally, about how and when the new regime is going to be introduced,” says lawyer Barbara Hendrickson, of BAX Securities.

Rima Ramchandani, a capital markets lawyer at Torys LLP, adds, “It’s going at a glacial pace.” She says it “felt to us going into 2016 that things have lost some momentum.”

Neither have proponents been out there selling the concept at securities conferences.

In fairness to Black, he is not a lawyer, which makes it difficult for him to hit the hustings plugging a system that the lawyers have yet to finish designing.

As he notes, he is “not the technical expert. Nobody wanted me in this role because I am an expert.”

Rather, that job will fall to the chief regulator and his or her deputies when appointed. Hiring can proceed now that a board is in place.

Until now, Black’s focus has been on operations and getting systems and financing into place. It’s a massive undertaking that will see the various participating provinces roll their current operations into a single unit.

“That work has continued,” he said. In fact, provinces have already been compensated for their participation, with the prior government earmarking $150 million for provinces who joined.

Black notes that work continues on the two structural acts, the CMA and the CMSA. On that front, a revised consultation draft of the CMSA was released in May and the consultation period closed in early July.

Lawyers say the federal government largely took lawyers’ concerns into consideration in the latest draft. 

As well, a blacklined draft of the CMA was released in January, but it has yet to be passed by the participating provinces.

“There is still a lot of concern about the model provincial legislation,” says Tuzyk.

He notes there is a “significant number of changes from the Ontario legislation” related to the Ontario Securities Act.

Missing is some of the rationale for the changes, says Tuzyk, which is normally explained when Ontario makes a change to its securities law.