August 21, 2001
For Immediate Release

Securities Regulators Give Final Approval to Alternative Trading Systems

Canadian securities regulators have given a boost to domestic capital markets by approving the introduction of Alternative Trading Systems (ATSs) into Canadian markets effective December 1, 2001.

The introduction of ATSs means more choice for investors and a more efficient marketplace, said Doug Hyndman, Chair of the Canadian Securities Administrators (CSA), the umbrella organization representing the 13 provincial and territorial securities commissions.

"This initiative is designed to increase competition, improve the efficiency of trades and increase liquidity in Canadian capital markets," Mr. Hyndman said, adding that regulators have already received expressions of interest from several domestic and foreign-based firms that are interested in establishing ATSs in Canada.

ATSs are automated matching systems that bring together orders from buyers and sellers using predetermined, established methods or rules under which the orders interact.

As a result of extensive comments and discussions with market participants, the CSA has distinguished between the equity and fixed income markets for purposes of price transparency and market regulation.

"These changes have been made to better reflect the historical differences between the fixed-income and equity markets," Mr. Hyndman said.

The ATS rules have been approved by all CSA members except the Quebec Securities Commission, which is scheduled to consider the rules next week. The rules also require government approval in some jurisdictions.

Price Transparency

To ensure transparency in the equity market, ATSs will be required to provide pricing information to an information vendor for two years. During that period, regulators will request that marketplaces and other industry participants develop and submit to the CSA a plan to consolidate order and trade information for the equity market.

Following extensive discussions with debt market participants, the Bank of Canada, the provinces and the federal Department of Finance, a consensus has been reached to improve the level of transparency for the government and corporate debt market. The CSA has refined the requirements applicable to marketplaces, inter-dealer bond brokers and dealers.

Regulation of ATSs

ATSs operating in the equity market will be regulated by a regulation services provider. ATSs trading fixed income securities, inter-dealer bond brokers and dealers will be regulated by existing Investment Dealers Association of Canada (IDA) policy for two years, while CSA staff work with the IDA to develop an appropriate long-term regulatory structure.

References:

Joni Delaurier
Alberta Securities Commission
(403) 297-4481

Frank Switzer
Ontario Securities Commission
(416) 593-8120

Andrew Poon
B.C. Securities Commission
(604) 899-6880

Denis Dubé
Commission des valeurs
mobilières du Québec
(514) 940-2163