Budget promises funding for national regulator effort

The latest effort at launching a national securities regulator may have died last month, but the federal government hasn’t given up on the dream: in Monday’s budget, the Liberals indicated plans to continue funding for the Canadian Securities Transition Office (CSTO).

Last month, the organization that was supposed to be steering the launch of a new cooperative capital markets regulator, the Capital Markets Authority Implementation Organization (CMAIO), was wound up and its staff laid off. The move seemed to acknowledge the reality that the political will required to get a new regulator off the ground doesn’t exist.

At the time, the federal government expressed regret at the move.

Commenting on the news of the CMAIO’s shutdown, a spokesperson for Finance Minister Chrystia Freeland said in a statement that the federal government “remains committed to working with the provinces and territories to establish a national securities regulator in Canada.”

In Monday’s budget, the government reiterated that commitment with a pledge to continue funding the Canadian Securities Transition Office (CSTO), which was established back in 2009 to help guide federal involvement in the development of a co-operative national regulator.

The government indicated that it intends to increase the statutory limit (initially set at $96.1 million) to ensure continued funding to the CSTO “to continue supporting federal efforts to advance the Cooperative Capital Markets Regulatory System and to strengthen capital markets stability and enforcement in Canada.”

“This is what the CSTO has been working on for several years now,” said Doug Hyndman, chair and CEO of the office.

The CSTO also provided the CMAIO’s annual funding, and worked on developing federal oversight of systemic risk (one of the areas of securities regulation where the Supreme Court of Canada has concluded that the federal government has jurisdiction).

Alongside the pledge to continue funding the CSTO, the budget also indicated that the government will extend the sunset dates on the Bank Act, along with other federal financial sector legislation, by two years to 2025.

“Extending the sunset dates will enable full consideration of the impacts of the pandemic on the financial sector as part of the next legislative review,” it noted.

At the same time, the budget proposed a public consultation expanding financial institutions’ use of electronic communications, “including the delivery and provision of governance documents, as well as virtual meetings.”

The government also said it will introduce legislation to implement a new oversight framework for retail payments designed to “promote growth, innovation, and competition in digital payment services…”; that it will launch a consultation on lowering the limit on what constitutes a “criminal interest rate” in an effort to address predatory lending by payday lenders; and it promised added funding for the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to, among other things, “build its expertise related to virtual currency.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.