In a few weeks, insider traders will be throwing out their fax machines.
Long regarded as the tool used to file insider reports, representatives at securities commissions all over the country are happy to say that the old paper method of filing to 13 separate jurisdictions is going the way of the dinosaur.
“It’s been years in the making,” said Joni Delaurier, a representative from the Alberta Securities Commission. “All of the securities commissions are going through a training phase right now and we are doing training sessions for all the constituents. The actual system will go on live on October 29 and on November 13, it’s the expectation that all insider trading reports will be filed online.”
The reports will be filed electronically over a new Internet-based system, which will shave between 10 days and several months off the current time it takes to get reports.
What’s more, by filing through The System for Electronic Disclosure by Insiders (SEDI), reports will be harmonized in all jurisdictions and all insiders will be required to report trades within 10 days of the transaction.
“If you want to see all of Canada’s insider trading information, you would have to go to all of the sites individually,” she said. “This is one system, one source and there is no charge.”
This is a move that has not come one moment too soon for Lawrence Surtees, a senior telecom analyst at IDC Canada and a former business journalist at The Globe and Mail’s Report on Business.
“It’s about time,” he said. “It is damn well about time for a centralized source in this country. The reason I say that is because insider trading reporting systems have been disparate because of fragmentation across different provincial jurisdictions.”
With the new system, investors will be able to access reports including weekly summaries for all reporting issuers and the details of individual transactions by insiders. Also, investors can access a list of registered insiders for each SEDI issuer and an issuer event history.
Surtees said that “a proper online vehicle to make searching for these things timely” was necessary because the old method pretty much defeated the entire system.
“Finding out about trades four or six months later isn’t all that important to anyone who would care,” he said. “It was sort of out of sight, out of mind. Now, it’s an example of the power of the Internet to make information available to all. Not just timely information, but information that levels the playing field so that you don’t have to be some big securities firm with big bucks to obtain it.”
But putting together a system of this size takes time, said Frank Switzer, a representative from the Ontario Securities Commission. The time, he added, is mostly used to make sure the users and the organizers are on the same page.
“We have the investors and the investing public, so we need to have a system that was Web-based and robust enough to handle lots of access from the public,” he said. “We also had to make sure that we had a really strong, secure and robust system to deal with very sensitive information. It’s people’s trading information on a Web site in real time. It has to be as user-friendly as possible because the information can be quite complicated.”
Just getting the 13 territorial and provincial jurisdictions to agree to speak as one body was challenge enough, he said.
“The other challenge was the public-private partnership nature of the agreement,” Switzer said. “One on hand, you have the private sector firm CDS acting as the general contractor and taking on the risks associated with financing the partnership. The other side is the 13 provincial and territorial regulators taking part in the project.”
The new system will also iron out some logistics issues that the jurisdictions have dealt with for years, said Delaurier.
“Right now, most commissions receive a faxed copy and have staff key it in and produce a report that goes up on the Web site weekly,” she said. “With that system, the information can take up to 10 days after the trade to go up on the system.”
The Alberta Securities Commission is at http://www.albertasecurities.com
The British Columbia Securities Commission is at http://www.bcsc.bc.ca
The Ontario Securities Commission is at http://www.osc.gov.on.ca
IDC Canada in Toronto is at http://www.idc.ca