Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Canada’s most-awarded
newsroom for a reason
Stay informed for a
lot less, cancel anytime
“Exemplary reporting on
COVID-19” – Herman L
per week
for 24 weeks
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Ian Russell is president and CEO of the Investment Industry Association of Canada

The Canadian Securities Administrators issued an open letter on Feb. 12 in response to the final report of the Ontario Capital Markets Modernization Taskforce. In the letter, the CSA stressed the importance of a highly harmonized securities regulatory regime. It called on Ontario to adopt the passport system – a recommendation that was noticeably absent in the task force’s final report.

The system is a regulatory framework designed to provide market participants with streamlined access to markets in all passport jurisdictions across Canada by dealing only with a participant’s principal regulator and complying with only one set of rules. For example, an issuer filing a prospectus in several jurisdictions would have that document reviewed only by its principal regulator and would get a deemed receipt in all other passport jurisdictions.

Story continues below advertisement

All provinces and territories, except Ontario, signed a memorandum of understanding in 2004 under which they agreed to implement a passport system in certain areas of securities regulation. At the time, the Ontario Securities Commission (OSC) agreed that securities regulatory reform would strengthen the competitiveness and cost efficiencies of Canadian capital markets by eliminating fees, expenses and duplication arising from 13 provincial and securities regulators, promote consistency in regulatory decision-making and lead to better and more effective enforcement across Canada.

But the OSC concluded the passport proposal did not sufficiently address these objectives. A modernized regulatory structure – a common securities regulator for all jurisdictions – was viewed as the better solution.

There are now several good reasons for the Ontario government and the Modernization Taskforce to reverse their position and recommend that the OSC join the passport system.

First, participation in the passport system would not weaken or contradict Ontario’s support for a common, co-operative regulator. Back in 2007, the Ontario government was not prepared to join the passport system “without a roadmap with reasonable timelines to get a common securities regulator.” In other words, an effective passport system was viewed as a disincentive for provinces to join a common regulator.

However, that was almost 14 years ago, and much water has passed under the bridge. Several large jurisdictions have deepened objections for a national regulator for many reasons. Even so, it is clear the decision of these entrenched jurisdictions would not be influenced by an incremental improvement to the regulatory process for corporate issuance through the passport system.

Furthermore, Ontario could confirm its commitment to the co-operative securities regulator, and propose to withdraw from the passport system, when the co-operative regulator begins operations with a critical mass of some, but not all, jurisdictions.

Second, it is clear that, with the OSC as part of the passport system, Ontario businesses would benefit from the increased efficiencies and a reduced regulatory burden for distribution of new securities offerings in national markets, avoiding review in multiple jurisdictions. Companies from outside Ontario would similarly find a lower regulatory burden and a more efficient and timelier process to distribute offerings to Ontario institutions and retail investors.

Story continues below advertisement

The passport system is congruent with the mandate of the Modernization Taskforce, promoting financings of Ontario companies and capital formation in the province, and encouraging more financings and trading in the Ontario marketplace.

Finally, supporting the passport system could facilitate the implementation of the Modernization Taskforce’s recommendations. Many of them already align with key CSA projects, especially 16 that deal with issues such as introducing an alternative offering model for reporting issuers, developing new rules for well-known seasoned issuers, streamlining continuous disclosure requirements and transitioning toward an access-equals-delivery system for electronic dissemination of regulatory documents.

Success would not just benefit Ontario markets, but deliver harmonized reform across Canada. A bargain between the OSC and the CSA could benefit both parties. The OSC would join the passport system on the condition the CSA agrees to a prioritized and reasonable timeline for implementing the Modernization Taskforce recommendations that are aligned with the CSA’s work.

While it is perhaps difficult to reach consensus on these complex reforms across jurisdictions, a redoubled effort to complete the prioritized list of reforms, on a timely basis, is worth it to achieve the benefit of a full passport system across the country. Most importantly, these harmonized reforms are badly needed for corporate issuers and dealers that depend on national markets to raise capital and to contribute to a strong economic recovery.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies