[5][6] The Alberta Court had considered the criminal law provisions to be so incidental to the purpose of the Act that they could not stand on their own, and it did not discuss in detail the international and interprovincial questions.

Canada noted that, while the provincial securities regulators efforts to operate a passport system have met with some success, there are still some significant constitutional limitations on their ability to regulate the securities industry in the modern age: Alberta, among others, argued that there were no flaws in the present passport system that could not be fixed, and that the proposed Act contained nothing that could not be found in current provincial legislation.

The Court held that, as presently drafted, the proposed Act is not valid under the general branch of the federal power to regulate trade and commerce.

[122] ... Canada’s problem is that the proposed Act reflects an attempt that goes well beyond these matters of undoubted national interest and concern and reaches down into the detailed regulation of all aspects of securities.

Competition law, by contrast, regulates only anti-competitive contracts and conduct — a particular aspect of economic activity that falls squarely within the federal domain.

Without attempting an exhaustive enumeration, the following provisions of the proposed Act would appear to address or authorize the adoption of regulations directed at systemic risk: ss.

[128] To summarize, we accept that the economic importance and pervasive character of the securities market may, in principle, support federal intervention that is qualitatively different from what the provinces can do.

However, as important as the preservation of capital markets and the maintenance of Canada’s financial stability are, they do not justify a wholesale takeover of the regulation of the securities industry which is the ultimate consequence of the proposed federal legislation.

We further note that we have not been asked for our opinion on the extent of Parliament’s legislative authority over securities regulation under other heads of federal power or indeed the interprovincial or international trade branch of s. 91(2).

[131] The various proposals advanced over the years to develop a new model for regulating securities in Canada suggest that this matter possesses both central and local aspects.

Yet we may appropriately note the growing practice of resolving the complex governance problems that arise in federations, not by the bare logic of either/or, but by seeking cooperative solutions that meet the needs of the country as a whole as well as its constituent parts.

The experience of other federations in the field of securities regulation, while a function of their own constitutional requirements, suggests that a cooperative approach might usefully be explored, should our legislators so choose, to ensure that each level of government properly discharges its responsibility to the public in a coordinated fashion.

[15][16][17][18] Certain observers agree that a national regulatory authority with a more focused brief is still possible under other heads of federal power,[19] as is the option of instituting a cooperative framework with the provinces.

[21][22] In January 2012, Minister of Finance Jim Flaherty stated that work is still continuing with the provinces to create a national regulator that would function within the bounds that the Court declared was within federal jurisdiction.