VANCOUVER — Securities regulators have been waging a quiet war on paper for years, quietly eliminating the need for paper filings with various electronic programs for public companies that aim to streamline the filing process and make more information available to investors.
On the West Coast,
the British Columbia Securities Commission has taken that process one step further, expanding e-services to allow companies raising money from investors through private placements to file the necessary documents online. The system was developed by the BCSC’s own internal IT staff.
Wayne Redwick, the project leader for the BCSC, says such transactions usually amount to about $7 billion annually. They also generate about 38,000 reports a year, containing thousands of mistakes. They hope the new electronic system will change that.
“We’ve developed a system that allows someone to go online to our Web site, go into our e-services and file their distribution report electronically,” says Redwick. “They can also file applications and search for precedent applications online.”
When companies sell securities, there are certain details they must report to the BCSC, such as the amount of money raised, type of security issued and the buyer. To file electronically, a company can visit the appropriate part of the BCSC Web site and screens will guide them through the process.
“The system then takes that information and repopulates it into the required form,” says Redwick. “They then press a button and file it electronically with us.”
Rather then having to pore over thousands of paper documents for mistakes and then convert them into electronic form, Redwick says they now have an electronic document that is nearly error-free, since the electronic process makes it difficult for users to make the kinds of errors they’ve traditionally made.
“We’re moving towards eliminating paper filings,” says Redwick.
The new system is optional right now while the BCSC works out the bugs, but he says the plan is to make electronic filing of private placement information mandatory within six months. While it’s too early for feedback so far, Redwick says he expects response to be positive.
“The objective is to make it easier for filers, they’re going to want to use this system,” says Redwick.
While it welcome the BCSC developing online programs for local issues, a spokesman for the Ontario Securities Commission says its preference is for national initiatives that will benefit the industry across Canada.
“Ideally, we’d prefer to see the development of a national approach, perhaps through enhancements to (national electronic filing system) SEDAR, so the development time spent is available nationally,” says Eric Pelletier.
To that end, the OSC is not developing any of its own IT systems but is rather working with national bodies like the Canadian Securities Administrators and Canadian Depository for Securities to develop online programs.
The first major initiative was the System for Electronic Document Analysis and Retrieval, or SEDAR, launched in 1997 for companies to complete mandatory filings and disclosure online and make those documents available to the public.
An online national registration database was recently created, and in June the System for Electronic Disclosure by Insiders (SEDI) was launched for company insiders to file trading reports online and to make those documents public.
“It really reduces errors by having everything automated, and you get publication much more quickly by having it available on a Web site free of charge,” says Pelletier.
More and more technology is coming into the process to slowly eliminate paper filings, and Pelletier says the support for going online is there.
“As long as the technology works and is easily accessible, there’s a lot of support for these kinds of initiatives,” he says. “As long as the application is simplifying the filing process and speeding things up, there’s a tremendous amount of appetite for it.”