OTTAWA - Ottawa is asking the Supreme Court if the federal government has the authority to create a national securities regulator.
Justice Minister Rob Nicholson announced late Friday that the government will seek an opinion from the court on the constitutionality of the proposed Canadian securities legislation that is expected to be ready by next spring.
"The government strongly believes that Parliament has the constitutional authority to enact a comprehensive federal securities act and is initiating preparatory steps in that direction," Nicholson said in a statement.
"In coming to this view, the government is supported by many of Canada's foremost constitutional experts. However, for greater certainty, we will be asking the Supreme Court for its opinion, which is why we are proceeding with this reference."
The move comes as the government says it is continuing to work with its provincial and territorial partners to develop legislation that would allow voluntary participation in a national regulator.
Currently in Canada, securities regulation comes under the jurisdiction of the provinces and territories.
Federal Finance Minister Jim Flaherty created an advisory office, headed by Doug Hyndman, former chairman and CEO of the B.C. Securities Commission, earlier this year to help draft the legislation.
The provinces had initially been mostly united in backing a so-called passport system, which would allow the provinces and territories to continue to set policies for their securities industries, but under a common umbrella.
However Flaherty has worked hard to push the idea and recently announced that all of the provinces and territories except Alberta, Manitoba and Quebec have joined the advisory committee.
"I'm a bit of a dog with a bone on this," Flaherty said Friday.
"I believe that we need to accomplish this and when I'm involved internationally, as I have been a lot, especially in the last two years, the one part of our financial system that stands out as being inefficient and ineffective is regulation of securities."
Quebec said in July it would go to the Quebec Court of Appeal in a bid to thwart Ottawa's plan to create a national securities regulator.
Quebec is not suing Ottawa, but wants the province's top court to state that securities are a provincial jurisdiction and that any federal intrusion violates the Constitution, however a Supreme Court ruling would provide legal certainty across the country.
Supporters of a national regulatory system, which most countries use, say it would cut the costs for companies seeking to list on Canadian stock markets.
Critics say a national regulator, such as the U.S. Securities and Exchange Commission, did not prevent the spate of white-collar crimes and banking industry collapse that battered the U.S. financial sector.
