NIN 99/45 - The Canadian Venture Exchange - Recognition and Related Instruments [NIN - Rescinded]

On November 26, 1999, the Commission recognized Canadian Venture Exchange Inc. ("CDNX") as an exchange in British Columbia under section 24(2) of the Act. This notice summarizes the instruments issued by the Commission in connection with the recognition of CDNX. This Notice replaces NIN #99/40, which is rescinded.

Background to Recognition

The Commission issued NIN#99/40 to provide, among other things, advance notice of the intention of the Commission to recognize the then-proposed CDNX as an exchange in British Columbia under section 24(2) of the Act.¹

¹ NIN#99/40 also discussed the impact of recognition of CDNX on existing instruments and contained a summary of the instruments that are also summarized in this notice.

The Vancouver Stock Exchange (the "VSE") and the Alberta Stock Exchange (the "ASE") merged to create CDNX as planned and the Commission recognized CDNX as an exchange in British Columbia at the effective time of the merger, namely at 11:59 p.m. (Mountain Standard Time), November 26, 1999. The Commission issued a Recognition Order (COR#99/323) to evidence that CDNX is recognized as an exchange in British Columbia under section 24(2) of the Act.

As noted in Multilateral Staff Notice 21-301 entitled "Canadian Venture Exchange", references to the VSE or the ASE in existing regulations, rules, orders, policies, notices or other instruments in the jurisdictions of various Canadian Securities Administrators may be treated and interpreted as references to CDNX.

Local Policy Statement 21-601 (BC) - Recognition of Exchanges, Self Regulatory Bodies and Jurisdictions ("Local Policy 21-601")

Local Policy 21-601 replaces Local Policy Statement 3-44 and evidences, among other things, that the Commission has recognized CDNX for the following specific purposes:

• The definition of "exchange issuer" in section 1(1) of the Act;
• The prospectus exemptions in sections 75(b)(i) and 75(b)(ii) of the Act and section 89(d)(ii) of the Securities Rules;
• The issuer bid and take over bid exemptions in sections 98(1)(a) and 99(e) of the Act; and
• The membership requirement for underwriters in section 89(d)(ii) of the Securities Rules.

Local Policy 21-601 also expands the list of exchanges recognized for the purposes of options described in section 75(b) of the Act to include The Toronto Stock Exchange and the Montréal Exchange. It also expands the jurisdictions recognized for purpose of de minimis take over bids and issuer bids to include Nova Scotia, Newfoundland and the United Kingdom.

Blanket Order 35-501 (BC) - Remote Access Trades on the Canadian Venture Exchange (the "Access BOR")

A trade is defined in section 1 (1) of the Act to include "participation as a trader in a transaction in a security or exchange contract made on the floor of or through the facilities of an exchange".

The Access BOR provides relief from the trading registration requirements of the Act for trades carried out on CDNX using a computer terminal outside British Columbia. This relief is available to dealers, and their partners, directors, officers or salespersons, that are not registered under the Act, but are registered with another Canadian securities regulatory authority. The relief is available only if the trade is made on behalf of a person that is not resident in British Columbia.

Blanket Order 31-501 (BC) - Registration of Brokers and Investment Dealers (the "RTR BOR")

The Registration Transfer Rules delegate certain registration functions under the Act to the VSE and the Pacific District of the Investment Dealers Association of Canada ("IDA"). CDNX will be transferring member regulation functions to the IDA.
At that time, registrants wishing to trade on CDNX will be required to register with the IDA. The RTR BOR gives registrants the option of applying to the IDA before the transfer in circumstances when the RTR would require the application to be made to CDNX.

Blanket Order #51-501 (BC) - Transitional Orders Relating to Former Alberta and Vancouver Stock Exchange Issuers (the "Reporting Issuer BOR")

As a result of the recognition of CDNX under section 24(2) of the Act, certain issuers formerly listed on the ASE that are listed on CDNX have become reporting issuers under paragraph (c) of the definition of "reporting issuer" in section 1(1) of the Act. The Reporting Issuer BOR has the effect of making a New Reporting Issuer (as defined in that BOR) not a reporting issuer for the purposes of key provisions of the Act and Securities Rules. As a result, a New Reporting Issuer and certain persons that are subject to requirements in relation to a New Reporting Issuer (e.g., insiders) are provided exemptions from certain disclosure obligations (subject to the issuer filing in British Columbia what it files in Alberta). Holders of securities of New Reporting Issuers, however, are not able to trade securities of a New Reporting Issuer in reliance on the resale rules so long as the issuer elects to participate under the Reporting Issuer BOR.

As a result of the recognition of CDNX for the purposes of the definition of an "exchange issuer", certain issuers formerly listed on the ASE would have become, but for the Reporting Issuer BOR, exchange issuers. The Reporting Issuer BOR excludes a New Exchange Issuer (as defined in that BOR) from the definition of "exchange issuer". Therefore a New Exchange Issuer is not subject to certain obligations (e.g., filing Form 61 reports) and does not obtain certain benefits (e.g., additional prospectus exemptions) that would otherwise apply to an exchange issuer.

While a New Reporting Issuer and New Exchange Issuer are automatically subject to the Reporting Issuer BOR, participation is voluntary. A New Reporting Issuer or a New Exchange Issuer may file a notice at any time in accordance with the provisions of the Reporting Issuer BOR and elect not to be subject to its terms.

As CDNX has not carried forward the resale requirements of the VSE that were recognized under Part 8 of the Securities Rules, persons who acquired securities of a VSE issuer under certain prospectus exemptions would not be able, but for the Reporting Issuer BOR, to trade those securities in reliance on the former VSE resale matrix. The Reporting Issuer BOR continues the application of the VSE resale matrix to resale of securities acquired in exempt distributions on or before November 26, 1999.

Blanket Order 14-501 (BC) - Definition of Exchange Issuer (the "Exchange Issuer BOR")

The Exchange Issuer BOR replaces BOR#88/2 as CDNX is now the only exchange recognized for the purposes of the definition of "exchange issuer" in section 1(1) of the Act. Under the Exchange Issuer BOR, issuers whose securities are listed and posted on CDNX and are listed and posted on any other exchange or quoted on a trading or quotation system in Canada are not included for the purpose of the definition of "exchange issuer" in section 1(1) of the Act. BOR#99/5 revokes BOR#88/2.

Status in Alberta

The Alberta Securities Commission has also recognized CDNX and has issued orders to give equivalent relief in Alberta.

Questions

Questions may be referred to the people below relating to the relevant documents:

The Policy and the Exchange Issuer BOR

Veronica Armstrong
Senior Policy Advisor
Policy and Legislation
British Columbia Securities Commission
(604) 899-6738
or 1-800-373-6393 (in British Columbia)
varmstrong@bcsc.bc.ca

The Access BOR and the RTR BOR

Simon Millner
Senior Legal Counsel
Policy and Legislation
British Columbia Securities Commission
(604) 899-6642
or 1-800-373-6393 (in British Columbia)
smillner@bcsc.bc.ca

The Reporting Issuer BOR

Gary Floyd
Senior Legal Counsel
Policy and Legislation
British Columbia Securities Commission
(604) 899-6653
or 1-800-373-6393 (in British Columbia)
gfloyd@bcsc.bc.ca

DATED at Vancouver, British Columbia, on December 2, 1999.

Douglas M. Hyndman
Chair

Ref: NIN#99/40
COR#99/323
Multilateral Staff Notice 21-301
LPS 21-601 (BC)
LPS 3-44
BOR#35-501 (BC)
BOR#31-501 (BC)
BOR#51-501 (BC)
BOR#14-501 (BC)
BOR#88/2
BOR#99/5


This NIN refers to other documents. These documents can be found at the B.C. Securities Commission public website atwww.bcsc.bc.cain the Policy Documents Database.