Securities Law

BCN 2002/03 - Application for recognition of Market Regulation Services Inc. Notice and Request for Comments [BCN - Rescinded]

Published Date: 2002-01-11
Effective Date: 2002-01-11

Market Regulation Services Inc. (RS Inc.) has filed an application for recognition as a self-regulatory organization in Alberta, British Columbia, Manitoba, Ontario and Québec.  RS Inc. proposes to operate as a regulation services provider under the Alternative Trading System (ATS) rules and will administer and enforce market integrity rules for the marketplaces that retain its services.  As part of its application for recognition, RS Inc. has developed a fee model to pay for the cost of providing market regulation services.

RS Inc.’s application and additional related documents were initially published for comment on October 11, 2001 (BCN 2001/69). The comment period closed on November 9, 2001. Subsequently, RS Inc. revised its fee model from a “market by market” approach to a “volume” approach for the reasons described below. Under the new model, RS Inc. would charge participants that use its regulation services based on their trading volumes. While an increase in the costs for market regulation to market participants was expected, the exact amount of the increase was unknown at the date of publication of the October Notice.  RS Inc. has recently advised that the overall cost of market regulation for dealers and other market participants will increase, as described more fully in the detailed request for comment referred to below. As RS Inc.’s proposed fee model differs substantially from the fee model described in its application and BCN 2001/69 and new information is now available, the Commission together with the Alberta Securities Commission, is requesting comment on the new fee model proposed by RS Inc.

Under the ATS rules, exchanges and quotation and trade reporting systems may monitor the conduct of their members and users directly or indirectly, through a regulation services providers, but ATSs must contract with a regulation services provider for this service. The Canadian exchanges are acceptable regulation services providers under the ATS rules, but both the Toronto Stock Exchange Inc. and the Canadian Venture Exchange Inc. have applied to their recognizing regulators for approval to retain RS Inc. as their regulation services provider. Assuming approval of the exchanges’ application, RS Inc. would be the only regulation services provider for the Canadian equity market.

In providing comments on the fee model for RS Inc., please keep in mind that there are currently no alternatives to RS Inc. to provide independent market regulation services to ATSs in the Canadian equity market. Without RS Inc., ATSs wishing to trade equity securities under the ATS Rules would have to contract with a Canadian exchange willing to act as a regulation services provider.

Please refer to the website of the Alberta Securities Commission at www.albertasecurities.com for a summary of RS Inc.’s revised fee model and the detailed request for comment.

Comments

You are invited to make written submissions on the RS Inc. fee model. We will consider submissions received by January 25, 2002.

Please address your submission as follows:

British Columbia Securities Commission
Alberta Securities Commission
c/o Louyse Gauvin, Special Advisor to the Chair
P.O. Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, BC
V7Y 1L2
E-mail: lgauvin@bcsc.bc.ca

We will be sharing your submission with the ASC and will not be able to maintain its confidentiality.


January 11, 2002

 


Douglas M. Hyndman
Chair

This Notice may refer to other documents. There documents can be found at the BCSC public website at www.bcsc.bc.ca in the Commission Documents database or the Historical Documents database.