Passport system being fast-tracked by regulators and politicians: CSA chair

(November 4, 2003) Canada’s securities regulators are working with provincial finance ministers in an attempt to quickly set up a system that would permit passport-style registration for financial advisors and firms, says Stephen Sibold, chair of the Canadian Securities Administrators (CSA).

Registration has been a thorn in the side for many advisors who complain that they are unable to service out-of-province clients due to onerous registration requirements.

“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 said today following a speech 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.”

Sibold, who is also chair of the Alberta Securities Commission, says there appear to be “no legitimate policy reasons,” for the current system, which includes 13 different sets of registration requirements and 13 different sets of registration categories.

But a passport system won’t necessarily mean one set of registration fees, Sibold added. “I promised significant improvement but not utopia,” he joked. “We won’t be solving that one in the near term.”

In his speech, Sibold called for Canada’s securities regulation system to be renovated, but not rebuilt. He repeated his position that a single national securities regulator does not appear to be a realistic alternative, at least in the short term. “I believe meaningful change can only be accomplished through a series of incremental practical and achievable steps… This can only be accomplished through coordination of efforts between the CSA and the provincial ministers.”

Sibold says that means marrying the CSA’s uniform securities legislation (USL) project with the provincial ministers’ passport system initiative and then operating the renovated regulatory system through the CSA, which recently set up a permanent office in Montreal to handle administrative functions.

The USL project involves the creation of a uniform securities act: a common platform for securities regulation that would apply to all provinces and territories. A draft version of the act is due before the end of the year, but Sibold does not expect the provinces to pass the legislation until 2005.

Under the provincial ministers’ passport system, supported by Alberta, Manitoba, British Columbia, Saskatchewan, Ontario and Quebec, a market participant would only have to deal with one securities regulator, typically in the registrant or firm’s home jurisdiction. Details are expected to be announced later this fall.

“I believe the combination of harmonized securities legislation and the passport system are the tools needed to provide substantial renovation and significant improvement within the confines of existing securities regulation in Canada,” Sibold said.

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A high-powered audience listened to Sibold’s breakfast address, including TSX president Barbara Stymiest, IDA president Joe Oliver and the chair of the Ontario Securities Commission, David Brown, who has expressed support for a single national regulator.

Sibold says he and Brown share the common objective of improving the current regulatory system. But the CSA chair stressed that he believes a national regulator is neither practical nor achievable in the near-term.

“Securities regulation is a matter of provincial jurisdiction,” Sibold told reporters after his speech. “It’s interesting what the feds are saying, it’s interesting what the wise persons committee may say, but the only group that can do anything is the provincial ministers and the CSA.”

“However, a very important step along the way — whether [a national regulator] is your end game or not — is uniform securities legislation, coupled with the passport system,” Sibold added. “It’s a parallel track, it’s complementary and it does not forestall further reform or development into a single regulator if there is consensus down the road for that.”

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What do you think of Sibold’s recommendations? Will they come to be? Is this the best solution for regulation reform? Share your thoughts and opinions about this initiative in the Talvest Town Hall on Advisor.ca.

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

(11/04/03)

Doug Watt