About the Transition Office
The Government of Canada established the Canadian Securities Transition Office in July 2009 under the Canadian Securities Regulation Regime Transition Office Act.
During its first year, the Transition Office led the development of a proposed federal Canadian Securities Act and a Transition Plan to integrate the securities regulatory functions of the then-participating provinces and territories into a pan-Canadian regulator, copies of which are in our archives.
The Transition Office then led efforts to establish this pan-Canadian securities regulator. In December 2011, the Supreme Court of Canada found the proposed Canadian Securities Act was beyond the constitutional authority of Parliament under the general trade and commerce power. However, the court identified aspects of capital markets regulation that are clearly within the authority of Parliament under the general trade and commerce power, including national information collection and the management of systemic risks, and under the criminal law power. These aspects are included in the proposed federal Capital Markets Stability Act. The court also made clear that each level of government has jurisdiction over some aspects of securities regulation and encouraged governments to work collaboratively to carry out their respective responsibilities.
In 2013, the Government of Canada signed an Agreement in Principle with the governments of British Columbia and Ontario to establish a federal-provincial Cooperative Capital Markets Regulatory System. Since then, five other provinces and one territory have joined the Cooperative System. The Transition Office continues to provide advice and support to the Government of Canada through the Department of Finance’s Financial Sector Policy Branch.
To support the establishment of the Cooperative System, participating governments created the Capital Markets Authority Implementation Organization (CMAIO) in 2015 to lead the work to integrate the participating regulatory organizations into the Capital Markets Regulatory Authority.
The Transition Office assisted in the establishment of CMAIO and provided office space and administrative, technical, and financial support. Due to delays in the development of legislation to create the Cooperative System, CMAIO paused its operations effective March 31, 2021, and the participating governments have authorized the dissolution of the corporation.
Also in 2015, the Transition Office began work to prepare for the successful administration of the proposed federal Capital Markets Stability Act.
In 2018, the Supreme Court of Canada found the proposed federal Capital Markets Stability Act to be within federal jurisdiction and the implementation of a pan-Canadian securities regulator as contemplated within the Cooperative Capital Markets Regulatory System to be permitted by the constitution.
In Budget 2021, the Government of Canada proposed funding of $12 million to continue the CSTO’s operations for two further years but that funding was rejected by Parliament. The government later advised the CSTO it would not seek further funding, with the result that the CSTO is now winding up. The CSTO’s work product will be transferred to the Government of Canada for use in any future initiative the government might undertake to exercise its jurisdiction over capital markets.
The Transition office’s mandate included:
Helping to prepare for the successful administration of the proposed federal Capital Markets Stability Act. Developing information and analytic tools to monitor the Canadian capital markets on a national basis, and have started to identify potential gaps in data currently reported. We have begun to develop indicators and indices to help detect imbalances and the build-up of risk that might lead to future financial crises, and are also developing and testing approaches for assessing and mitigating identified systemic risks. In many circumstances, mitigating risks will require close collaboration and coordination with other federal and provincial regulatory agencies. Mirroring work already done in countries around the world to ensure financial benchmarks are reliable, available, and warrant investors’ confidence, we are also developing an inventory of benchmarks used in the Canadian capital markets, as well as establishing a process to assess their systemic importance.
The Cooperative System
Providing supporting for the development of the Cooperative Capital Markets Regulatory System. The governments of Canada, British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Saskatchewan, and Yukon have agreed to implement the Cooperative System to streamline the capital markets regulatory framework and protect investors, foster efficient capital markets, and manage systemic risk, while preserving strengths of the current system.
Advice to Government
Providing advice to the federal Department of Finance’s Financial Sector Policy Branch on the proposed federal Capital Markets Stability Act, the Cooperative System, and regulation of the Canadian capital markets more generally.