IDA boss weighs in on passport system

(November 27, 2003) The provinces can easily move to a passport system for securities firms and registrants by adopting a couple of simple principles, says Joe Oliver, president of the IDA.

A committee of provincial finance ministers set up to consider ways to reform the country’s securities regulation system has focused on the passport model, which would allow firms and advisors to operate across Canada simply by obtaining authorization in their home jurisdiction.

Oliver, speaking today in Montreal, says he recently wrote to the provincial ministers and told them that the current mutual reliance system in prospectus and registration review can be substantially improved immediately.

“The way to do that is to implement it on a ‘notice’ rather than a ‘review’ model,” he said. “The principal regulator should be mandated to notify its provincial counterpart. But they should have no authority to conduct a separate review of a prospectus or registration application. Further, an ‘opt-out’ should only be possible with ministerial approval.”

Oliver says implementing those proposals would allow the ministers to substantially achieve a true passport system without legislative delegation.

There’s been some debate in the industry over whether a passport system can work effectively without some sort of uniform securities legislation (USL), a project led by the Canadian Securities Administrators (CSA). A draft version of the uniform securities act is due before the end of the year, but the provinces are not expected to pass the legislation until 2005.

However, CSA chair Stephen Sibold says regulators have been working with the provinces to quickly set up a system that would permit passport-style registration for advisors and firms.

“CSA staff is working hard in talking to the provincial ministers on a series of ‘quick wins’ and one of them is in the registration area,” Sibold told reporters following a speech earlier this month in Toronto. “To see if we can jury-rig some sort of a system that will improve what we have today and permit — through mutual recognition — one decision maker for registration matters.”

In his speech today, Oliver pointed to the three current driving forces in securities reform: USL, the provincial ministers’ initiative and the federally appointed wise persons committee. “It has been possible to at least hope that reform was about to meet its moment,” he said.

But he added there are concerns the reform process could grind to a halt. “At this point, just before the publication of their recommendations, rumours abound, including disquieting signs that the moment may be lost.”

The wise persons committee, scheduled to issue its report in mid-December, may well change the landscape of the regulatory debate, Oliver said, adding that he would not predict what recommendations will emerge nor how they will be received.

“But I can safely predict one thing: failure to reform the current system will provide the momentum to replace it.”

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