Canadian Securities Administrators

Abstract

In October 1997, the CSA released for comment proposed National Instrument 35-301, "Conditional Exemption from Registration for United States Broker-Dealers and Agents". The proposed National Instrument provides U.S. broker-dealers and their agents with a conditional exemption from Canadian registration and prospectus requirements in order to facilitate certain cross-border trading in foreign securities between U.S. broker-dealers and their U.S. clients who are present in a Canadian jurisdiction.

- National Instrument 21-101, "Marketplace Operation", Companion Policy 21-101CP, and Forms 21-101F1-21-101F4. The proposed National Instrument is intended to provide an appropriate regulatory framework within which traditional markets, such as exchanges, and new markets, such as alternative trading systems (ATSs), can operate. The companion policy sets out guidelines dealing with the application of the instrument.

The CSA have been in the process of making certain amendments to National Instrument 13-101, "System for Electronic Document Analysis and Retrieval" (SEDAR) and to the SEDAR Filer Manual, "Standards, Procedures and Guidelines for Electronic Filing with the Canadian Securities Administrators". These amendments, which remain subject to certain approvals, include a requirement that all electronic filings via the SEDAR system be made in Portable Document Format (PDF). The adoption of the PDF filing requirements is being facilitated by the release of Version 6.0 of the SEDAR Filer Software, which was expected to be implemented on August 2, 1999.

CSA's Strategic Plan

The CSA recently published its strategic plan for the period of April 1, 1999 to March 31, 2002. The plan, which was approved by the CSA at their spring meeting, sets out the CSA's strategic direction through seven core strategies and outlines the business objectives, initiatives, and measures that support them. The CSA published the plan to provide securities market participants, regulators, and the public with an overview of the strategic objectives and initiatives that will guide the development of the Canadian securities regulatory system over the next three years.

For further information, please refer to CSA Notice 11-301, which has been reproduced in Volume 1 of the Canadian Securities Law Reporter at [Symbol Not Transcribed]82-031.

U.S. Broker-Dealers Granted Conditional Exemption from Registration

In October 1997, the CSA released for comment proposed National Instrument 35-301, "Conditional Exemption from Registration for United States Broker-Dealers and Agents". The proposed National Instrument provides U.S. broker-dealers and their agents with a conditional exemption from Canadian registration and prospectus requirements in order to facilitate certain cross-border trading in foreign securities between U.S. broker-dealers and their U.S. clients who are present in a Canadian jurisdiction.

Based on the comment letters received, the CSA have decided that two reciprocity issues must be resolved before the National Instrument is implemented. The issues are outlined in CSA Notice 35-501, "Conditional Exemption from Registration for United States Broker-Dealers and Agents", which has been reproduced in Volume 1 of the Canadian Securities Law Reporter at [Symbol Not Transcribed]82-371.

Proposed Instrument Provides Exemption from Insider Report Filings

Proposed National Instrument 55-101 provides an exemption from the obligation to file insider reports under Canadian securities legislation to certain directors and senior officers of subsidiaries and to affiliates of insiders who neither hold the securities of a reporting issuer in significant amounts nor are in a position to acquire knowledge of undisclosed material information. The proposed National Instrument also permits directors and senior officers of reporting issuers to report, on an annual basis, acquisitions of securities under automatic securities purchase plans.

For further information, please refer to the May 1999 Saskatchewan Securities Commission Bulletin.

Instruments Proposed

The CSA has issued the following proposed documents:

- National Instrument 21-101, "Marketplace Operation", Companion Policy 21-101CP, and Forms 21-101F1-21-101F4. The proposed National Instrument is intended to provide an appropriate regulatory framework within which traditional markets, such as exchanges, and new markets, such as alternative trading systems (ATSs), can operate. The companion policy sets out guidelines dealing with the application of the instrument.

- National Instrument 23-101, "Trading Rules" and Companion Policy 23-101CP. These documents set out common trading rules that will apply to trading on all marketplaces. However, the Trading Rules do not prohibit marketplaces from implementing additional rules.

- Ontario Securities Commission Rule 23-501, "Designation as Market Participant", designates a recognized quotation and trade reporting system to be a market participant for purposes of the definition of "market participant" in subsection 1(1) of the Securities Act.

Comments are sought on the proposed documents. For further information, please refer to the Special Supplement to the July 2, 1999 OSC Bulletin.

Regulators Publish Rules on Alternative Trading Systems

Canada's securities regulators recently published proposed rules, policies, and other materials that will provide a framework for the regulation of trading systems, including Alternative Trading Systems (ATSs), the chair of the Canadian Securities Administrators said recently.

"We are publishing for comment various documents that propose a regulatory framework within which traditional markets, such as exchanges, and new markets, such as ATSs, can operate in the Canadian capital markets," CSA chair Douglas Hyndman said following the national organization's summer meeting in Calgary.

ATSs are automated matching systems that bring together orders from buyers and sellers by using predetermined established methods or rules under which the orders interact. So far in Canada, ATSs have only been allowed to operate as members of existing exchanges because of concerns about market fragmentation. However, most market participants now believe that the time has come to allow ATSs to compete with traditional exchanges.

For further information, please refer to the July 9, 1999 OSC Bulletin.

Notice of Proposed Changes to Proposed Documents Published

The Ontario Securities Commission recently published the following documents for comment:

1. Notice of Proposed Changes to National Instrument 44-101 (NI44-101), "Short Form Prospectus Distributions";

2. National Instrument 44-101, "Short Form Prospectus Distributions";

3. Appendix A to NI44-101, "Consent to Collection of Personal Information";

4. Appendix B to NI44-101, "Issuer's Submission to Jurisdiction";

5. Appendix C to NI44-101, "Non-Issuer's Submission to Jurisdiction";

6. Form 44-101F1, "AIF";

7. Form 44-101F2, "Short Form Prospectus";

8. Companion Policy 44-101CP, "Short Form Prospectus Distributions"; and

9. Ontario's Implementing Rule.

For further information, please refer to the Special Supplement published with the July 23, 1999 OSC Bulletin.

Amendments to National Instrument 13-101 Delayed

The CSA have been in the process of making certain amendments to National Instrument 13-101, "System for Electronic Document Analysis and Retrieval" (SEDAR) and to the SEDAR Filer Manual, "Standards, Procedures and Guidelines for Electronic Filing with the Canadian Securities Administrators". These amendments, which remain subject to certain approvals, include a requirement that all electronic filings via the SEDAR system be made in Portable Document Format (PDF). The adoption of the PDF filing requirements is being facilitated by the release of Version 6.0 of the SEDAR Filer Software, which was expected to be implemented on August 2, 1999.

Since satisfactory testing of Version 6.0 of the SEDAR Filer Software has not yet been completed, the CSA have decided to delay its release until September 7, 1999. The requirement that electronic filers file all documents exclusively in PDF format will not become effective until the release of Version 6.0. A new version of the SEDAR Filer Manual addressing these changes will be published before the new software is released.

For further information, please refer to the July 23, 1999 OSC Bulletin.