Publication for comment
The British Columbia Securities Commission is publishing for comment its concept paper New Concepts for Securities Regulation. The paper accompanies this Notice.
We developed these concepts by asking ourselves how effectively our current system of regulation deals with today's threats to investor protection and market integrity. The concept paper identifies existing rules that impose major regulatory burdens on industry but that may not protect investors and markets as effectively as in the past. The paper also identifies areas where new rules may make sense.
At this stage, the concepts are ideas for discussion, not proposals. Through this comment process and the accompanying consultation program described below, we will hear the views of industry, investors and our fellow regulators on the concepts. We will be guided by the comments we receive in designing any proposals we ultimately recommend.
Concept 2 â A Simpler Registration System
This concept would replace many detailed and prescriptive registration rules with a code of conduct. The code would state general principles about registrant qualification, proficiency, character, and behaviour. It would be accompanied by a policy or similar interpretive document to provide guidance to industry on the application of the code. Registrants would be liable to investors if the code was not followed.
The concept would allow anyone registered in one Canadian jurisdiction to do business across Canada.
The concept questions whether individual registration is still necessary, and considers whether foreign registrants who do not solicit business in Canada should be allowed to advise or open accounts for Canadians without having to register here.
Foreign registrants
The Problem
The current registration requirements apply to all firms, domestic or foreign.
A foreign registrant cannot advise or open accounts for Canadians unless it registers in each Canadian jurisdiction where it wishes to operate. This means it must incorporate a Canadian subsidiary, keep records in the jurisdictions where it is registered, become a member of the IDA or the Mutual Fund Dealers Association, participate in a Canadian compensation or contingency trust fund such as the Canadian Investor Protection Fund, and comply with all other rules relating to registrants in each Canadian jurisdiction.
As a result, few foreign registrants register in Canada. This limits Canadians' access to the expertise of foreign registrants when they wish to invest in foreign securities.
The Concept
Consider allowing foreign registrants that do not solicit business from Canadians to advise or open accounts for Canadian residents to trade in foreign securities without registering here.
Foreign firms could then deal with Canadian clients who open accounts on an unsolicited basis without complying with duplicative Canadian requirements. Canadian investors that wish to invest in foreign securities could benefit from the expertise in those securities provided by foreign registrants.
Canadian residents who seek out foreign registrants would not have the protections of Canadian law, but that would be their choice. Our responsibility to protect investors in our markets does not extend to protecting them when they voluntarily and without solicitation choose to do business in foreign markets.
If foreign registrants wanted to solicit business from Canadian investors, the registration requirements would continue to apply.
BCSC email:
deregulation@bcsc.bc.ca
OSC email:
inquiries@osc.gov.on.ca