Legal news and trends for Canadian in-house counsel and c-suite executives
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It's a perfect stepping stone to a national regulator. We'd like to see a national regulator because it's more effi cient, but this is certainly an improvement and a positive step on the way there. SUSAN COPLAND, Investment Industry Association of Canada Securities Commission. Until recently, applicants would apply with their own provincial commission, after which the other regulators had three days to make a decision on registering them elsewhere. But for the most part, they would accept the principal body's decision unless they were aware of bad behaviour leading them to conclude otherwise. The new system streamlines the process. "It totally automates the whole thing," Jakab says. The main exception to the simplified procedure is Ontario, which opted out of passport. Nevertheless, its regulator, the Ontario Securities Commission, will operate an interface allowing the prov- ince's own dealers and advisers to register elsewhere automatically. Registrants from other jurisdictions won't benefit from that same courtesy in Ontario, where the OSC will still have one day to make a decision on approving them. The harmonized system also intro- duces new registration categories that capture those who previously fell out- side of the rules. For example, exempt market dealers trading in securities that don't require prospectuses will now have to register except in a few circum- stances in Alberta, British Columbia, Manitoba, and the territories. Also affected are foreign firms that will be exempt from registration in some cases. As a result, they'll face the choice of whether to register with provincial regulators or limit their business activi- ties in Canada so they remain exempt, says Mark DesLauriers, a securities law partner at Osler Hoskin & Harcourt LLP in Toronto. As well, part of the harmonization drive includes a move to set standard rules around the proficiency, solvency, and integrity of dealers and advisers. That means more market participants, such as exempt market dealers, will now be writing more exams, be required to meet minimum capital and insurance require- ments, and have to submit to occasional compliance reviews, DesLauriers says. For people like Shaun Fluker, all of these changes are significant and repre- sent a "huge achievement" in securities law reform. "What is out there in terms of securities harmonizes 95 per cent of the law," says the University of Calgary law professor and former legal counsel with the Alberta Securities Commission. "If you think about where we were starting from, getting 95 per cent harmonized is a huge achievement." Fluker, a skeptic of federal plans for a national regulator, calls the timing of the two projects — passport and Hyndman's transition office — unfortunate. "It's a bit ironic that it's taking place at a time that passport is just getting going and is quite a viable framework for all compa- nies and registrants to effectively work across the country but only deal with one regulator." What is clear, however, is the move to passport hasn't silenced calls for a single federal body. While some observers sus- pect the recent changes are a bid to cir- cumvent the federal route, organizations like the Investment Industry Association of Canada hope they're merely the start of the broader overhaul proposed by Flaherty. "It's a perfect stepping stone to a national regulator," says Susan Copland, a lawyer and Vancouver-based director for the organization. "We'd like to see a national regulator because it's more efficient, but this is certainly an improvement and a positive step on the way there." DesLauriers also argues the harmo- nization path hasn't gone far enough, particularly in areas such as derivatives INHOUSE OCTOBER 2009 • 27