The Canadian Securities Administrators (CSA) have published a notice to implement the next phase of the passport system, a regulatory framework designed to provide market participants with streamlined access to Canada’s capital markets.

Today’s notice introduces a new rule and review policies that outline how the system will work in participating passport jurisdictions and how market participants will deal with Ontario.

“The passport rule together with the national policies will simplify the regulatory approval process and benefit businesses and investors in all provinces and territories,” says Jean St-Gelais, chairman of the CSA and president & CEO of Quebec’s Autorité des marchés financiers. “This phase of passport will give issuers access to Canada’s capital markets by allowing them to deal with only one regulator and one set of harmonized requirements.”

The new rule, Multilateral Instrument 11-102 Passport System, is scheduled to take effect in the passport jurisdictions on March 17. The rule will allow someone to clear a prospectus or obtain a discretionary exemption from their home regulator, and have that clearance or exemption apply automatically in all other passport provinces and territories.

The CSA says the rule represents a major step toward meeting the commitments set out in the Sept. 30, 2004 memorandum of understanding regarding securities regulation among the governments of all provinces and territories, except Ontario.

The new policies, National Policy 11-202 Process for Prospectus Review in Multiple Jurisdictions and National Policy 11-203 Process for Exemptive Relief Application Reviews in Multiple Jurisdictions, set out the processes for the filing and review of prospectuses and exemptive relief applications.

These policies will replace and streamline the current mutual reliance review systems for prospectuses and exemptive relief applications, the CSA says.

The policies also outline how market participants in passport jurisdictions will gain access to the Ontario market. They are scheduled to take effect in all provinces and territories on March 17.

The foundation for the passport system is a set of harmonized regulatory requirements consistently interpreted and applied throughout Canada. For that reason, the passport for prospectuses is coming into force at the same time as the CSA’s National Instrument 41-101 General Prospectus Requirements. The CSA says it now plans to proceed with passport for registration as it finalizes the proposed new national rule for registration requirements (National Instrument 31-103).

The instrument, policies and other related documents are available on various CSA members’ websites.