Members of the Canadian Securities Administrators, without the support of the Ontario Securities Commission, are implementing the passport system effective September 19.

The new rule, Multilateral Instrument 11-101 Principal Regulator System, gives a market participant access to the capital markets in multiple jurisdictions by dealing with the regulator and the law of its principal jurisdiction.

Under the passport model, the principal regulator will usually be the regulator in the jurisdiction where the market participant’s head office is located. Firms will generally have the same principal regulator under the new system and the mutual reliance review system (MRRS) established earlier by the CSA.

As the OSC is not participating in the initiative, Ontario-based market participants will not be able to rely on the exemptions contained in the rule, but will continue to be able to use MRRS. The OSC will continue to act as principal regulator under MRRS. The Ontario government is still holding out hope for a single national regulator.

All CSA members, including the OSC, are implementing some other related rule and policy changes on the same date, including: the rule governing exemptive relief applications; MRRS for prospectuses; disclosure rules for oil and gas activities; and the rule governing commodity pools.

Most of these proposed amendments were published for comment on May 27. The one amendment that was published for comment back then, but is not being adopted, is an amendment to the National Registration System that would shorten the opt-in period from five days to two days.

“We have decided not to make the proposed amendment at this time because we need more experience with the system to determine whether it is practical to reduce the opt-in period,” the CSA says. It plans to monitor the operation of the system and reconsider the proposed amendment.

The MRRS amendments streamline the process for reviewing annual information forms. They do not distinguish between the review process for initial and renewal annual information forms because the CSA expects to eliminate this distinction later this year. Until that happens, they will continue to review initial and renewal annual information forms as usual.

Some jurisdictions will also publish a local notice about consequential amendments to local instruments, the CSA notes. In Quebec, the Autorité des marchés financiers will adopt regulatory provisions to permit the application of the passport system to mutual fund dealers and their reps. However, since these regulatory provisions will most likely not be implemented until later this year, the AMF intends, in the meantime, to issue a blanket exemption order.