Ontario opts out of passport model

(September 30, 2004) Six provinces and one territory have signed a deal pledging to work towards implementing the so-called “passport” approach to securities reform. However, Ontario is refusing to take part.

Provincial ministers representing Quebec, New Brunswick, Manitoba, British Columbia, Saskatchewan, Alberta and Yukon met in Calgary today and signed an inter-provincial memorandum of understanding (MOU) on the passport model, which would allow companies to register to sell securities in one province or territory and all other particpating provinces and territories would recognize their credentials.

Under the terms of the deal, the passport system would be established by August, 2005. The ministers also agreed to review regulatory fees and to explore options for further reform.

Ministers from Nova Scotia, Prince Edward Island, Newfoundland, the Northwest Territories and Nunavut have also agreed in principle to sign the memo or to present it to their cabinet for a decision this fall.

“The passport system will make it easier and less costly for firms wishing to access capital markets in more than one province or territory,” said Alberta Revenue Minister Greg Melchin in a statement.

“Working together, we can accomplish meaningful steps on the road to reform,” Melchin added. “We remain committed to looking for additional ways to improve the Canadian securities regulatory system.”

Ontario has refused to support the passport model, arguing that it doesn’t provide meaningful reform for Canada’s fractured regulatory system.

“The proposed memo of understanding will not significantly improve investor protection or enforcement measures, nor will it reduce the confusion resulting from 13 different sets of rules,” said Gerry Phillips, chair of Ontario’s Management Board of Cabinet.

Earlier this year, Phillips released his own proposal for reform, suggesting the creation of a single regulatory agency run by the provinces, with local offices, one common set of securities laws and a single fee structure based on a cost-recovery basis.

At the time, Phillips said he would support the passport model, but only if the other provinces also agreed to “a clear transition to a common regulator within a set timeframe.”

“The proposed MOU alone is not enough,” Phillips said today, adding that he is willing to continue working with the other provinces and territories on regulatory reform. “We have to do better for the Ontario economy — for the Canadian economy.”

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