B.C. drops firm-only registration

(August 27, 2004) Just two months after announcing that B.C. advisors would no longer be required to register individually, the British Columbia Securities Commission (BCSC) is shelving its controversial firm-only registration system.

The BCSC introduced firm-only registration as part of a comprehensive re-write of the province’s securities laws, schedule to be enacted in November. Under the system, individuals would no longer need to register to trade in or advise on securities, if they worked for a registered firm, giving companies the responsibility of hiring representatives suitable for work in the securities industry.

“We have decided that it is not practical to proceed at this time with the firm-only registration system,” said BCSC Chair Doug Hyndman in a statement issued today.

The backtrack is a response to recent regulatory developments, Hyndman explained. “Quebec has now decided to join the National Registration Database system, making it a fully national system for registering securities firm representatives and work is proceeding on a new passport system for registration,” he added. “Implementing firm-only registration in B.C. would complicate these processes.”

Hyndman says while the commission believes that firm-only registration remains a sound approach to improving securities firms’ accountability for the hiring and conduct of their sales representatives, feedback and studies suggest its greatest benefits would come about if the system were adopted nationally.

Last year, the IDA poured cold water on firm-only registration for that very reason, stating that such reforms must be implemented on a national basis.

“It is unlikely that many or perhaps any other jurisdictions will follow B.C.’s lead,” said IDA president Joe Oliver. “We must therefore analyze the benefits of a B.C.-only regime.”

Securities lawyer Glorianne Stromberg also opposed the BCSC’s plans. “The conditions of registration that exist now are pretty pragmatic,” she said in an interview last year. “To wipe out the years of work that those conditions reflect seems to me to be a huge step backwards and not in the interest of either the industry or the investing public.”

“Other securities regulatory bodies are not ready to adopt this system yet,” Hyndman conceded. “The work we have done will be useful when the time comes to pursue the idea again.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com