Sources, History & Constitutional Division of Powers of Securities Regulation

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  • Sources, History & Constitutional Division of Powers of Securities Regulation
  • Division of power
  • Provinces have enacted securities acts under their power to legislate wrt “property and civil rights”- includes dealings in prop, contracts, and reg of business, trades and professions

o Provincial laws upheld even where there is some overlapping, but not conflicting, federal law

o sometimes prov securities laws do not apply to federal companies

  • Federal government could justify regulating securities under the trade and commerce power (may be necessary due to globalization)
  • History of securities regulation
  • Securities reg (regulating brokers, requiring prospectus disclosures, etc.) is a rel recent phenomenon, beginning in mid 19th century (ON first jurisdiction to adopt English Directors Liability Act in 1891; 1920 fraud protection acts, prospectus disclosures in 1947)

o Modern Can securities reg = derived from Kimber Report, 1965 (addressed insider trading, takeover bids and ongoing disclosure requirements) and Merger Report, 1970 (led to “closed system” statute with emphasis on ongoing disclosure for the purposes of secondary market trading)

o Interprovincial cooperation has also been an important part of securities reg, although there is no national regulator yet

  • Sources of Provincial Securities Regulation

1) Securities Law & Related Sources

  1. Provincial and Territorial Securities Acts
  2. Provincial regulations and rules: originally security acts give extensive powers to Lieutenant Governor in Council to make regs. Now, securities commissions also have power to make rules and regs, subject to procedural requirements
  3. Procedural requirements include: commission must publicize proposed rule and accept comments for 90 days; if commission makes material changes to rule must publish amended rule and give further period for comment; when finalized, rule goes to Minister who can accept/ reject/ return rule to commission for further consideration
  4. National and multi-lateral instruments: developed cooperatively and agreed to by all securities administrators across country (no binding legal effect, but can be adopted in each jurisdiction).
  5. when some but not all of Can Securities Administrators is sue an instrument, it is a multilaterial instrument
  6. Policy statements: issued by securities administrators in Can and indicate how they interpret the legislation, regs or rules and provide guidance to market participants in complying with legislation, regs and rules
  7. National policy statements: issued jointly by Can Securities Administrators
  8. Notices and Accounting Communiques: released by securities commission and contain info of interest to those who deal with regs on a regular basis
  9. Memoranda of Understanding: between diff securities administrators in Can or abroad
  10. Decisions & rulings
  11. Blanket orders: securities commissions can issue orders (usually sought and provided on a case- by-case basis)- in ON this is no longer allowed (must instead pass a rule)
  12. Bulletins, Websites and Canadian Securities Administrators Communiques
  13. International Organization of Securities Commissions: review major reg issues, promote development and improvement of efficiency of emerging securities markets by establishing principles and min standards, prepare training and facilitate exchange of info/ expertise
  • Self-regulatory bodies
  1. Stock exchanges: pass by-laws and rules to govern qualifications and continued fitness of members for membership in exchange, set out requirements for listing of securities of issuers and conditions to be met by listed issuers to maintain their listing, and govern manner in which trading is conducted
  2. Will also issue policy statements
  3. Other self-regulatory orgs: Investment Dealers Association of Canada, Canadian Securities Institute, Institute of Chartered Financial Analysts (have tests etc.)
  4. Securities Commission Review: have power to review and make decisions wrt a by-law, rule or other reg instrument made by a self-regulatory org or stock exchange
  • Commission and Administrators: Commissions are 2 tiered structures
  1. Panel of commissioners: makes orders and rulings and acts as an appeal tribunal from decisions of administrator; also formulates policies and makes recommendations to govt for changes in legislation/regs
  2. Admin agency headed by chief admin officer: exercises admin functions assigned to administrator under applicable act and implements decisions/directives of commission

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