The Quebec government is vowing to take the federal government to court over Ottawa's proposed voluntary "co-operative capital markets regulatory system."

Canada has been under pressure for years — both at home and from abroad — to replace the patchwork system of provincial regulators for stocks and bonds with one national watchdog.

Federal Finance Minister Jim Flaherty announced a deal with British Columbia and Ontario to take part in the voluntary system Thursday morning in Ottawa, a possible first step towards a national regulator.

But Quebec's Finance Minister Nicolas Marceau called the surprise announcement "unacceptable," during a news conference at the national assembly in Quebec City on Thursday.

Marceau said the national system would strip financial control away from the province jeopardizing jobs.

Two years ago, the Supreme Court of Canada ruled that a unilateral move by Ottawa would violate provincial jurisdictions guaranteed under the Constitution.

hi-jim-flaherty-cp-03372148

Finance Minister Jim Flaherty said Thursday B.C. and Ontario are joining a voluntary "co-operative capital markets regulatory system," a possible first step to a national securities watchdog. (Adrian Wyld/Canadian Press)

Quebec's Intergovernmental Affairs Minister Alexandre Cloutier said Ottawa is ignoring the Supreme Court ruling, denouncing Ottawa's "unilateral decision" as a "new offensive against Quebec."

Cloutier said Quebec has asked its Justice Department to review the proposed deal and will not hesitate to challenge the federal government in court.

"The problem is with the federal government, it has no constitutional and legal grounds to do so," Cloutier said.

Quebec, Alberta oppose national regulator

Flaherty said he is moving ahead with the provinces that are onside. Flanked by his counterparts from British Columbia and Ontario, Flaherty invited all provinces to join in the new system.

But even Francois Legault, the leader of the opposition party Coalition Avenir Quebec, said Thursday morning his party was opposed.

"I think it's unanimous all parties in the National Assembly are against this [national plan]," he said. "We will fight against this proposal."

Marceau said he spoke with Alberta's finance minister, who indicated Alberta's position has not changed.

"Alberta's position has always been that we have jurisdiction over that issue," Alberta Premier Alison Redford told reporters in Calgary on Thursday.

"We are not certain at this point from the information that's been provided today whether or not those concerns have been addressed."

Redford, who fought the federal government on this when she was justice minister, said she expects there's probably still some work to do if Alberta is to get on board with the national plan.

"We're not going to allow any other jurisdictions, including the federal government, impose a system on us that won't be in the best interest of Albertans," Redford said.

Quebec's finance minister believes Quebec and Alberta will find other allies in their opposition to Ottawa's plan.

Manitoba has also opposed the idea of a national securities regulator in the past.

On Thursday, Manitoba Finance Minister Stan Struthers said in a written statement he was made aware of Ottawa's proposal through the media and that he would have to review the proposal before commenting further. 

"Any decisions moving forward will be based on what is best for the people of Manitoba and our economy," Struthers said.

Key points in Thursday's deal

To avoid jurisdictional bickering, the new "co-operative capital markets regulatory system" will:

  • Have provinces that agree to join amend their provincial securities legislation to be uniform across the board. That means the provinces will agree to regulate in the same way, without ceding jurisdiction to the federal government.
  • An "expert board of directors" will run the regulatory system, but it will be overseen by a council of ministers with each participating jurisdiction represented.
  • Each participant gets to maintain offices in its own province. 

Flaherty says this proposal has not yet been put to the other provinces.

The Quebec ministers said Flaherty's surprise announcement comes ahead of a joint federal-provincial meeting of the finance ministers starting on Sunday.