The Canadian Investing Landscape

The Canadian stock markets began on a path in some ways very similar to US markets and yet at the same time in certain ways distinct. To begin with all of Canada’s provinces have securities laws modeled after the groundbreaking “blue sky” law of Kansas from 1911. Manitoba was the first Canadian province to pass a securities law in 1912 with the other provinces quickly following. The Manitoba Sale of Shares Act empowered the Public Utility Commission to issue licenses authorizing the sale of securities. However, the key difference would come in the midst of the Great Depression and rest upon the limits of federal power in Canada at least as understood by the Canadian Supreme Court today. Today’s Canadians can largely thank the British for the overall division of power between the federal and provincial governments and more specifically what was once known as the British North America Act, 1867. The British had intended to create a strong Canadian Federal Government in order to prevent a devastating civil war like recently seen in the United States as well as fend off any threat of an American invasion. However, in some ways the result was actually a relatively weak Federal Government, because the British could not fully anticipate the nature of future economies of the twentieth century. Section 91 of what is now known as the Constitution Act, 1867, clearly gives the Canadian Federal Government power over banking but was never able to be extended to direct authority over the securities markets. In contrast, in the United States President Franklin Delano Roosevelt was able to coax the US Supreme Court to largely accept his revolutionary New Deal legislation which included the foundational federal securities regulation that would serve as a base for all federal regulation of securities since in the United States.