The Canadian Securities Administrators has issued a notice indicating how it plans to deal with the fact that it is implementing the passport system without Ontario.

Its proposal: create interfaces that will allow firms to gain access to both jurisdictions.

The notice describes the policies that the CSA prosposes will replace the existing mutual reliance review system for prospectuses and exemptive relief applications. As laid out, national regulatory decisions will be based on the operation of the passport system and interfaces between the passport jurisdictions and Ontario.

The regulators plan to publish a similar policy for registration in a few months.

The CSA received many comments on the impact of Ontario not adopting the passport system and on the proposal to repeal the current mutual reliance review system. But both Ontario and the CSA remain wedded to their respective positions. So, regulators have developed interfaces, it says, “to make the securities regulatory system as efficient and effective as possible in the circumstances for all market participants who want to gain access to the capital markets in both passport jurisdictions and Ontario.”

The interfaces for market participants in passport jurisdiction would be similar to the existing mutual reliance review systems, in which the participant generally deals only with its principal regulator (PR) to gain access to Ontario.

The interfaces for Ontario market participants would provide direct access to passport jurisdictions. An Ontario market participant would, therefore, be able to deal with the Ontario Securities Commission as its PR to obtain a regulatory decision that automatically applies in passport jurisdictions, the CSA says. Also, a foreign market participant would be able to gain access to the Canadian capital markets through a principal regulator on the same basis as a market participant in that regulator’s jurisdiction.

The CSA says it recognizes that market participants from passport jurisdictions would be disadvantaged in accessing the Ontario market in comparison with Ontario market participants accessing the markets of passport jurisdictions. The Council of Ministers and the regulators in the passport jurisdiction plan to review the direct access provided to Ontario market participants two years after the full implementation of passport, if the OSC has not committed to adopt it by that time.

Comments on the plan are due by Oct. 30.