Securities Law

BCN 2004/21 - Cost Savings Under a Firm-Only Registration System [BCN]

Published Date: 2004-05-06

The British Columbia Securities Commission has published its analysis of the potential cost savings of a firm-only registration system. The study, Cost Savings Under A Firm-Only Registration System, is on the BCSC website at

The firm-only registration (FOR) proposal was contained in the BC Model, published in April 2003 (BCN 2003/12). Under FOR, individual representatives would be exempted from registration if they were employed by a registered firm.

The study has two main conclusions:

1. If adopted nationally, FOR would save registered firms $12.6 million - 49% of their current internal costs related to individual registrations.

  • Before the recent introduction of the National Registration Database (NRD), registered firms in Canada spent about $28 million annually in internal costs associated with registering individuals. Since the implementation of NRD, these costs have fallen by about $2 million, to $26 million.
  • Eliminating individual registration entirely through FOR would lower annual internal costs from $26 million to an estimated $13.4 million - a saving of $12.6 million, or 49% of current costs.
2. If adopted in British Columbia alone, FOR would save British Columbia registered firms 43% of their current internal costs related to BC expenses.
  • Today, firms spend $3.7 million annually on internal costs related to registering in British Columbia. FOR would lower these costs to $2 million - a saving of $1.7 million. These savings are offset by $0.2 million of new process costs. Total estimated savings under FOR are therefore $1.5 million annually, or 43% of current internal cost.

The savings described above are significant in percentage terms, but they appear more modest in absolute dollars, especially when compared to industry financial operating statistics. For example, the Investment Dealers Association of Canada reports operating profit for its members for the year 2003 of $3.3 billion, after operating expenses of $4.8 billion. This shows that although a switch to an FOR system would appear to yield the relative savings that we anticipated, the overall amount spent by industry on the internal costs of registration appear to be much less than expected.

On May 5, 2004 the British Columbia government introduced in the Legislative Assembly a new Securities Act (Bill 38). In addition to whatever cost savings FOR may bring, there are also policy arguments for it, so we expect that the draft rules proposed for adoption under the new legislation will include the exemption that would implement FOR. We expect to publish these draft rules for comment in June.

May 6, 2004

Brent W. Aitken
Vice Chair

This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at in the Commission Documents database or the Historical Documents database.