Regulators introduce national registration system

(January 9, 2004) Canada’s securities regulators have published for comment a long-anticipated proposal for a national registration system (NRS), which would allow advisors and firms to register in any province, based on the rules in their home jurisdiction.

Under the terms of the new rule, the home or “principal” regulator would review all advisor and firm registration applications for suitability. Other regulators would rely on the principal regulator’s recommendations to either accept or reject the application.

The rule would apply to three registration categories: investment dealers, mutual fund dealers and portfolio managers. In cases where registrants are members of a self-regulating organization (SRO), such as the IDA or the MFDA, the SRO would assume the role of principal regulator.

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.

Today’s announcement follows through on a promise made by Canadian Securities Administrators (CSA) chair Stephen Sibold, who said last year that the regulator was working on a “quick win” in the registration area, to permit through mutual recognition one decision maker for registration matters.

The CSA says the new system would reduce the time spent by applicants to prepare and file forms, because only one set of documents would have to be filed with one regulator. “In addition, there will be a reduction in compliance costs due to the fact that registrants will only have to meet one set of requirements,” the CSA says. “There should also be a reduction in processing time by the regulators.”

But Sibold suggested in a speech last November that the new system likely will not immediately lead to a single set of registration fees and there’s no guarantee fees will be reduced. “I promised significant improvement but not Utopia,” he joked. “We won’t be solving that one in the near term.”

Here’s how the NRS would work: Advisors file an application for registration in the jurisdiction where their office is located, through the national registration database (NRD) which was launched last year (all jurisdictions are participating in the NRD, save Quebec, which plans to join in the near future). The home regulator reviews the application and makes a recommendation to other regulators.

The “non-principal” regulators then have five days to decide whether or not to accept the recommendation. If refused, the application would be handed over to the non-principal regulator for processing in the normal fashion, although the CSA expects “opt out” provisions to be very rare.

The CSA plans to collect data from the NRD for six months after the new registration system is introduced and conduct a cost-benefit analysis.

Comments on the national registration system are due by March 30, 2004.

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