Globe and Mail  | BARRIE McKENNA and JANET MCFARLAND  |  Published Thursday, Sep. 19 2013, 10:20 AM EDT

The federal government has struck a deal with Ontario and B.C. to create a new securities regulator that covers roughly two-thirds of Canadian capital markets, reigniting a long fight over a national securities regulator.

The three governments said Thursday the other provinces and territories will be invited to join the new “co-operative” regulator, slated to be operational by 2015.

The regulator would be based in Toronto, but with offices across the country and initially run jointly by Ontario and B.C.

Finance Minister Jim Flaherty said the proposed new system would help attract more investment, better protect investors, make it easier to prosecute white collar criminals and manage risks to the financial system.

“It’s a good day for keeping markets honest,” he told reporters in Ottawa, alongside Ontario Finance Minister Charles Sousa and B.C. Finance Minister Michael De Jong.

Mr. Flaherty said he expects several other provinces and territories to quickly join the new system, designed to get around a 2011 Supreme Court of Canada ruling that blocked Ottawa from unilaterally setting up a national regulator.

“This is an historic agreement,” he added. “This issue has been mooted in Canada for at least 70 years, if not longer, and now we’ve actually accomplished something.”

But for now, the two most vocal opponents of a national regulator– Quebec and Alberta – remain on the outside.

Mr. Flaherty said the system respects provincial powers, adding that he hoped Quebec would eventually find it “acceptable.”

There have been numerous attempts to create a national securities regulator in Canada, which stands virtually alone among developed countries in not having one. The current system is a costly and often confusing web of 13 provincial and territorial regulators.

Ermanno Pascutto, executive director of Toronto-based shareholder advocacy group FAIR Canada, said the new regulator is a positive development, and more provinces are bound to join once it is up and running. FAIR has strongly advocated for a national regulator and was an intervener in the Supreme Court hearing on the issue in 2011.

“This is a huge step because we’ve been trying to do this for 50 years, and it seemed that unanimous agreement was an impediment to moving forward,” Mr. Pascutto said. “So if you can get several major provinces on side, then over time you can convince other provinces and territories.”

He said a key part of the announcement is a pledge by the federal government to provide transitional funding for provinces to compensate them for revenue they will lose from the fees charges by their securities regulators. Many provinces do not have strong philosophical concerns about joining a national regulator, Mr. Pascutto believes, but are unwilling to give up a revenue source.

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