The Investment Dealers Association of Canada is leaning toward the so-called passport system as a way to reform the regulatory system.

In a speech to the International Finance Club of Montreal, IDA president & CEO Joe Oliver said a true passport system “would be a major move forward. That would be especially the case if it were married with the Uniform Securities Legislation project, which the Canadian Securities Administrators are pursuing.”

In the past, the IDA has been conspicuously non-committal among the various reform options. But, amid signs that the more ambitious reform efforts may be losing momentum, the IDA is touting a way to achieve a passport model.

“It has been possible to at least hope that reform was about to meet its moment. But the problem with moments of great potential is that they are just that — moments. They disappear in the time it takes to recycle yesterday’s newspaper,” Oliver said. “At this point, just before the publication of their recommendations, rumors abound, including disquieting signs that the moment may be lost.”

With that in mind, Oliver said that the current structure, modified to enhance harmonization, “has the potential to reflect regional differences, while providing the efficiencies that many are seeking in a national regulator… Under such a system a market participant would need to deal with just one securities regulator, usually the one in its home jurisdiction.”

In the short term, there will not be a legal delegation of decision-making among the provinces and territories. But Oliver said that provision may have to await the implementation of a USL, which is not likely before 2005.

Oliver says that to immediately improve the current mutual reliance system in prospectus and registration review, regulators should “Implement it on a ‘notice’ rather than a ‘review’ model. The principal regulator should be mandated to notify its provincial counterparts. But they should have no authority to conduct a separate review of a prospectus or registration application. Further, an ‘opt out’ should only be possible with ministerial approval.”

“If these simple principles are implemented, Ministers will have substantially achieved a true passport system, without legislative delegation,” he said. “Otherwise, the result will not be a passport system at all. It will merely be a modestly improved system of mutual reliance.”

“The Wise Persons’ Committee is expected to report in the next two or three weeks. That may well change the landscape of the debate. I am not going to predict what recommendations will emerge, or how its recommendations will be received. But I can safely predict one thing: Failure to reform the current system will provide the momentum to replace it,” Oliver concluded.