News Release

Vancouver - The British Columbia Securities Commission today published new conditions of registration for investment dealers that trade in U.S. over-the-counter markets.

The new Conditions of Registration for Investment Dealers that Trade in the U.S. Over-the-Counter Markets increase investment dealers' accountability for their trading activities in securities quoted in the U.S. OTC markets, such as the OTC Bulletin Board (OTCBB) and the Pink Sheets. The conditions are proposed to take effect on June 12, 2008.

A notice published on June 25, 2007 outlined how the BCSC planned to deal with those that engage in abusive activities in the U.S. OTC markets and have visible connections to the province. The conditions are one of the five key elements of this plan.

On Oct. 29, 2007, the BCSC published for comment draft conditions of registration for dealers that trade in U.S. OTC markets. The comment period ended on Dec. 31, 2007. The conditions of registration reflect the comments received.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the new registration requirements by visiting the Securities Law and Policy section on our website at www.bcsc.bc.ca. If you have questions, contact Ken Gracey, Media Relations, 604-899-6577.

Learn how to avoid investment fraud at the BCSC's investor education website: www.investright.org.

Backgrounder
Conditions of Registration for Investment Dealers that Trade in the
U.S. Over-the-Counter Markets

What is the U.S. OTC securities market?

• The OTC market is composed of the OTC Bulletin Board (OTCBB) and the Pink Sheets. These markets are legal and are home to legitimate businesses, but they are vulnerable to abuse because the level of regulatory scrutiny is very low.

Why is the BCSC concerned about the U.S. OTC securities market?

• A disproportionate number of players in the U.S. OTC markets who engage in abusive activities have visible connections to B.C. Their activities damage the reputation of the province's capital markets, harming the interests of legitimate issuers, investment dealers, and other market participants.

Under Conditions of Registration for Investment Dealers that Trade in the U.S. Over-the-Counter Markets:

• all registered investment dealers with B.C. offices that trade in OTC issuer securities will be required to have a supervision and compliance system in place to deal with risks
• dealers will be prohibited from trading securities in OTC issuers if the beneficial owner is unknown to them
• the physical deposit of share certificates of any OTC issuer would be prohibited until a senior member of the firm approves the deposit
• dealers will have to follow recording and reporting requirements
• dealers must monitor both physical and electronic deliveries of OTC securities into client accounts
• an exemption will be available for dealers who make OTC trades that are purely incidental to serving clients who do not make a practice of trading in OTC securities