The Canadian Securities Administrators is publishing for comment a proposed rule that would create a National Registration System (NRS). The CSA says it expects the NRS to streamline registration and cut compliance costs.

The CSA expects the NRS to reduce the time spent by applicants to prepare and file forms because applicants will only have to file one set of documents with one regulator. In addition, there will be a reduction in compliance costs due to the fact that registrants will only have to meet one set of suitability requirements. There should also be a reduction in processing time by the regulators.

NI 31-101 Requirements under the National Registration System proposes that firms or individuals may register in any Canadian jurisdiction solely under the rules of its principal regulator.

The principal regulator for a firm is determined by an analysis of connecting factors as set out in proposed National Policy 31-201 National Registration System.

For individuals, the principal regulator is the regulator for the jurisdiction in which the individual filer’s working office is located. The non-principal regulators are the regulators in the other jurisdictions where the firm or individual wishes to be registered.

The principal regulator will review the application for registration in accordance with its securities legislation requirements regarding suitability for registration.

The CSA says non-principal regulators will rely on the principal regulator’s review to accept or refuse the application. When the non-principal regulators opt in to the principal regulator’s decision on registration, the filers will be exempt from the suitability requirements of the non-principal regulator. The filer will only have to satisfy the requirements of the principal regulator.

The applicable conduct rules will be those of the jurisdiction in which the client is located. In the cases of registrants who are members of self-regulatory organizations such as the Investment Dealers Association, the Mutual Fund Dealers Association, or the Montreal Exchange, the SRO requirements will likely be the applicable conduct requirements.

The CSA says the NRS is an optional system that can only be used by investment dealers, mutual fund dealers, and unrestricted advisors. Individuals may only use the NRS when the sponsoring firm is eligible and has elected to use the NRS.

The CSA is proposing to do an impact analysis upon implementation of the NRS. Data from the National Registration Database will be gathered for a period of six months before and after the implementation of the NRS. The actual elapsed processing times will be observed and form the basis of time savings calculations for regulators from pre-implementation to post-implementation. The time savings will be converted to cost savings (benefit estimates) for the industry. The CSA says it will provide a “report card” on the impact of NRS as part of the analysis.

Comments on the plan are due by March 30.