Securities regulators say they will soon disclose a "solution" for unhappy repatriated Canadian users of U.S. brokerage services.

By Tuesday, it's expected negotiations to convince U.S. discount brokers to register in Canada will be completed. U.S. brokers have been able to register in Canada but tended not to, says Dean Pelkey, spokesman for the B.C. Securities Commission, which led the push by the Canadian Securities Administrators to repatriate cost-conscious users of U.S. brokerage services such as TD Waterhouse U.S.

Over the past few weeks, new Canadian applicants to TD Waterhouse U.S. had their applications rejected because they used a Canadian address. TD gave them until yesterday to decide to use TD Waterhouse Canada (with higher commissions than its U.S. counterpart), other Canadian brokers or a more compliant U.S. brokerage. Most users opted to transfer to the Canadian unit, said TD Waterhouse head John See, who didn't think it likely that U.S. brokers would put up with the regulatory requirements in Canada.

According to cyber investor advocate Bylo Selhi, other U.S. brokerages to turn down new Canadian accounts include AmeriTrade, DLJ Direct, Salomon Smith Barney and Vanguard.

MyDiscountBroker and SureTrade still appear to accept Canadian accounts since their new account application forms provide for Canadian addresses and for "non-resident alien" status, Selhi says.

Mr. Pelkey denied that regulators are under pressure from Canadian financial institutions that may want to keep their high-fee businesses intact. Rather, the BCSC believes Canadians using U.S. brokers may have problems down the road should their investments go sour. He also dismissed speculation the federal government's campaign to punish offshore tax havens had anything to do with the crackdown.

Ontario Securities Commission spokesman Frank Switzer says input received by the OSC has been mixed. "Some say we should uphold the law in Canada and people should register here; others say for various reasons they want to be able to have U.S. accounts and to trade with them. We want to work to make sure Canadians follow the law but also are respectful of the financial choices people have made. I think we can come up with a good solution."

He prefers the description "solution" to "compromise": "one that will satisfy regulators, satisfy the American discount brokers and satisfy Canadian investors who use U.S. discount brokers."

Canadian use of U.S. brokers was tolerated for a while, since it was a grey area not opposed by the U.S. Securities and Exchange Commission. But the practice was discouraged by the OSC and Canadian regulators. Once the numbers passed 10,000, however, it was felt that regulators could no longer turn a blind eye.

Meanwhile, some Canadian residents -- many of whom have worked at one time in the United States and set up IRAs and other vehicles with U.S. brokers -- say the best way for Canadians to get access to those brokers is to maintain a U.S. address, possibly "borrowing" the address of an American relative. The idea is to report addresses and all brokerage transactions on both sides of the border to tax authorities in both countries. The Canadian address is supplied on tax returns.