Canadian Securities Lawyer & Attorney : Stikeman Elliott Law Firm : Montreal, Ottawa, Calgary, Vancouver, Montreal, Toronto

In response to the CSA's proposed amendments to NI 23-101 Trading Rules, released earlier this month, IIROC has now published for comment proposed amendments to the Universal Market Integrity Rules that would correspond to the changes to NI 23-101. IIROC's proposed amendments would include repealing the rule and policies respecting the "best price" obligation concurrent with the implementation of trade-through protection. With the publication of the proposed amendments, IIROC also withdrew from further consideration interim provisions on trade-through obligations, previously published by Market Regulation Services (a predecessor to IIROC). Until the amendments implementing trade-through protection are made to NI 23-101 and UMIR, however, Participants remain subject to the "best price" obligation under Rule 5.2 of UMIR.

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In addition to its ABCP study, IIROC has also published for comment a draft guidance note entitled "Best practices for product due diligence". Specifically, IIROC is requesting comment on the relevant criteria in determining whether a product should be subject to a due diligence review, factors to be considered in conducting product due diligence and the structures and procedures necessary for an effective review. 

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On October 17, the Investment Industry Regulatory Organization of Canada (IIROC) announced the publication of a study concerning the manufacture and distribution of third-party asset-backed commercial paper in Canada. The study reviews the events leading up to the "liquidity crisis" of August 2007 in the ABCP market and includes recommendations concerning product due diligence, product transparency, conflicts of interest and credit ratings.

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The MFDA is publishing for comment proposed amendments to Rule 2.6 Borrowing for Securities Purchases. The proposed amendments would require leverage risk disclosure only when an Approved Person makes a recommendation to invest using borrowed funds or becomes aware of a client borrowing for investment. The proposed amendments would also exempt RRSP loans from the disclosure requirements of Rule 2.6. In conjunction with the proposed amendments, MFDA staff will be revising the prescribed risk disclosure language in MR-0006 to provide a brief explanation of key risks and relevant considerations in plain language. The comment period expires November 3, 2008.

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IIROC has published notice of proposed changes to its registration related rules to make them consistent with the objectives of the CSA’s Registration Reform Project proposals.

IIROC’s proposal to overhaul its rules encompasses significant amendments to the existing rules, and while designed primarily to implement the approach and objectives of the Registration Reform Project in the IIROC Dealer Member Rules, also includes proposed rule changes of a housekeeping nature and those directed at improving the clarity of the rules in general.

These rule amendments are expected to be made effective on the same date as proposed National Instrument 31-103 and related changes to securities laws required to implement the CSA’s Registration Reform Project. The proposal is open for a 30-day comment period.

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On August 12, 2008, the Minister of Finance approved amendments to NI 21-101 and NI 23-101, which are set to come into force on September 12, 2008. As described in our earlier post, the CSA initially approved amendments to NI 21-101 Marketplace Operation (NI 21-101) and NI 23-101 Trading Rules (NI 23-101) in June 2008 to deal mostly with the best execution obligation of dealers and advisers.  An unofficial consolidation of the amendments can be found here.

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On August 26, 2008, the OSC approved amendments to the TSX Rules. The amendments remove from the TSX Rules the fixed opening and closing times of the TSX's trading sessions and instead authorize the Board of Directors of TSX Inc. to determine the opening and closing times. Certain minor changes to the amendments were made following their publication for comment on September 7, 2007 and the amendments take effect on September 12, 2008.

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On August 29, the CSA published a Joint Notice and Request for Comment regarding an application by the MFDA to extend the suspension of MFDA Rule 2.4.1 to December 31, 2010.

MFDA  Rule 2.4.1 requires MFDA Members to pay any remuneration for business conducted by MFDA Approved Persons on the Members' behalf directly to and in the name of the Approved Persons. 

The MFDA is requesting that the securities regulatory authority in each of British Columbia, Ontario, Saskatchewan, and Nova Scotia extend the suspension of Rule 2.4.1 to December 31, 2010 to give it time to develop proposed amendments that would allow Approved Persons to direct remuneration in respect of business they conduct on behalf of MFDA Members to non-registered corporations, subject to certain conditions.

Suspension of MFDA Rule 2.4.1 currently expires on December 31, 2008.

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The TSX has adopted and the OSC has approved various amendments to the TSX Company Manual. The Amendments, effective as of June 16, 2008, are of a housekeeping nature and including the following:

• Amendments to correct references to the Securities Act in Part III and Part VI of the Manual, required as a result of changes to the OSA.
• Changes to Appendix H: Form 11 -- Notice of Private Placement, to clarify that blanket shareholder approvals are not permitted.
• Changes to Appendix H: Form 12 - Notice of Intention to Make a Normal Course Issuer Bid
• Appendix A -- Original Listing Application is being replaced with a streamlined application, but no substantive changes have been made.

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The CSA have approved amendments to NI 21-101 Marketplace Operation (NI 21-101) and and NI 23-101 Trading Rules (NI 23-101) to deal mostly with the best execution obligation of dealers and advisers.

The Amendments, now scheduled to come into force on September 12, 2008, were initially published for comment along with other proposed amendments on April 20, 2007 with the Joint Notice on Trade-Through, Best Execution and Access to Marketplaces (originally published in conjunction with RS, now IIROC. The CSA have now decided to separate these three topics and deal with each separately on separate timetables.

The current amendments deal with best execution along with some other minor changes, including changes related to the electronic audit trail provisions. Amendments dealing with trade-through protection and rules related to access to marketplaces are proposed to be dealt with under separate requests for comment in the coming months.

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The OSC and a number of other Canadian securities regulatory authorities or regulators have published this notice of approval of the Investment Industry Regulatory Organization of Canada (IIROC). IIROC is a result of the combination of the regulatory activities of the Investment Dealers Association of Canada (IDA) and Market Regulation Service Inc. (RS).

The notice of approval is comprised of IIROC’s official Recognition Order, a memorandum of understanding with respect to the regulatory oversight program for rule review and approval, IIROC’s new By-law No. 1 and Transition Rule No. 1 and certain consequential amendments to related documents. 

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On October 12, 2007, the TSX issued a request for comments to determine whether it should revisit its practice of exempting listed issuers from the requirement to obtain security holder approval for share exchange acquisitions of other public entities. The request for comments includes a summary of some of the material considerations for or against such a proposal and a comparison to similar requirements in other jurisdictions.

The TSX Manual currently requires shareholder approval for acquisitions where the number of securities issued or issuable as consideration exceeds 25% of the issued and outstanding securities of a listed offeror. Prior to January 1, 2005, the TSX generally applied its historical practice of exempting listed issuers from this requirement for acquisitions of other public entities. Amendments that were effective on that date expressly added this exemption as Section 611(d) of the TSX Manual. In response to concerns raised by some market participants, the TSX has decided to review whether it is appropriate to continue to make this exemption available to its listed issuers.

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