The Canadian Securities Administrators (CSA) is proposing to expand the passport system into a couple of new areas, in an effort to make the fractured Canadian regulatory system more streamlined.
The CSA published proposals on Thursday that would extend the passport system, which currently applies primarily to prospectus and registration filings, to two new areas — certain cease trade orders, and applications to stop being a reporting issuer.
The new provisions will make it easier for firms to end their status as a reporting issuer. They will also make it easier to impose cease trader orders on issuers that haven't filed their financials, and easier to have those orders revoked once the problem is rectified.
In CSA Notice and Request for Comment: Proposed Amendments to Multilateral Instrument 11-102 Passport System, the CSA says that, in a bid to enhance investor protection, it is also considering the idea of having cease trade orders that are imposed on firms for failing to meet their continuous disclosure obligations apply in all passport jurisdictions — regardless of whether the company in question is considered a reporting issuer in all provinces. The CSA asks in the notice whether this approach would give rise to any concerns.
"This expansion of the passport system will further simplify regulatory processes and benefit reporting issuers in all provinces and territories," said Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers (AMF). "It will also allow Canadian securities regulators to more efficiently carry out their common mission to protect investors and the integrity of Canada's capital markets."
The passport system allows issuers and market players to deal primarily with their principal regulator, and to have its decisions apply in most of the other provinces. Reflecting its long-standing desire for a national securities regulator, Ontario is the only jurisdiction that doesn't officially participate in the passport system; although the CSA has developed "interfaces" between Ontario and the rest of the CSA that has much the same effect. So, along with the proposals to extend the passport system, the CSA is also proposing new interfaces in those areas to include Ontario.
The proposed amendments are now out for comment until June 15.