IDA cools on firm-only registration

(August 21, 2003) The IDA is backing away from its previous support of a firm-only registration system for the securities industry, proposed by the British Columbia Securities Commission (BCSC). The IDA says 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,” says IDA president Joe Oliver in a recent letter to the BCSC. “We must therefore analyze the benefits of a B.C.-only regime.”

Oliver says that since the IDA operates in all provinces and territories, it’s not in the best interest of members to have requirements that apply in only one province. “We are also quite convinced that other provinces will not recognize the firm-only registration process,” he adds.

The BCSC introduced firm-only registration as part of an extensive draft model proposing changes to the province’s securities act. Under the system, individuals would no longer need to register to trade in or advise on securities, if they worked for a registered firm.

From a practical point of view, firm-only registration would have a minimal effect on the IDA, Oliver says. “Most IDA members and their firms are registered in multiple provinces and so many of our members would face the same filing requirements under the firm-only system as they do today.”

One of the main advantages of a firm-only model is the potential that registration fees could be reduced or eliminated. But that appears unlikely, Oliver says, since a significant portion of registration fees collected by the BCSC are used to fund other operations. “We suspect that a market participation fee of some sort will be required,” Oliver says. “Once the fee becomes known, some of the attraction of firm-only registration could be lost.”

The IDA’s comments on firm-only registration hint at a larger question. Should provinces be adopting a “go-it-alone” attitude at a time when several securities reform projects are pushing a harmonized, national approach, such as the Canadian Securities Administrators’ uniform securities legislation proposal and the federal government’s wise persons committee?

Ontario is facing the same dilemma with its controversial fair dealing model. Indeed, Ontario Securities Commission chair David Brown has admitted that unless fair dealing can be adopted nationally, the commission may have to consider another approach. A draft version of the fair dealing model is due for publication this summer.

What do you think about this matter? Do you agree with the IDA about this? How would you like to see the reform efforts end up? Share your thoughts about this topic in the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca