BCN 2002/37 - Exemption from recognition for TSX Inc. and Memorandum of understanding about the oversight of exchanges and quotation and trade reporting systems [BCN - Rescinded]

On March 26, 2002, the Commission issued an order exempting The Toronto Stock Exchange Inc. (TSE) from recognition as an exchange under the Act (COR#02/034), on the basis that

• TSE was recognized by, and subject to the regulatory oversight of, the Ontario Securities Commission (OSC).
• The oversight of exchanges and quotation and trade reporting systems (QTRSs), including the TSE, would be subject to a memorandum of understanding among recognizing jurisdictions (MOU).

On March 26, 2002, the Commission signed an MOU about the oversight of exchanges and QTRSs. Under the MOU, the OSC would have been the lead regulator of the TSE and responsible for conducting an oversight program of the TSE to ensure that it meets appropriate standards for market operation and regulation.

Subsequently, the TSE started carrying on business as TSX and advised the Commission that it would proceed with a reorganization of TSX in anticipation of an initial public offering. On July 10*, 2002, TSX changed its legal name to TSX Inc. (TSX). Pending receipt of further information on the reorganization, the Alberta Securities Commission (ASC) deferred issuing its order exempting TSX from recognition and signing the MOU.

On July 3, 2002, TSX applied to the Commission for a continued exemption from recognition to reflect the reorganization and the change in its legal name. At about the same time, TSX filed an amended application with the ASC for exemption from recognition as an exchange in Alberta. Under the reorganization, TSX will become a wholly owned subsidiary of a new holding company, TSX Group Inc. (TSX Group). Following the reorganization, TSX Group intends to conduct an initial public offering.

On September 3, 2002, the Commission issued an order continuing the exemption of TSX as an exchange under the Act effective on the closing of the reorganization on the basis that following the reorganization

• TSX will continue to be recognized by the OSC and will continue to be subject to the regulatory oversight of the OSC.
• The oversight of exchanges and QTRSs will be subject to a revised MOU among recognizing jurisdictions.

On September 3, 2002, the Commission, the ASC, the OSC, the Manitoba Securities Commission, and the Commission des valeurs mobilières du Québec (CVMQ) approved the revised MOU. Under the revised MOU, the OSC continues to be the lead regulator of TSX and to be responsible for conducting an oversight program of TSX to ensure that it meets appropriate standards for market operation and regulation. Like the original MOU, the revised MOU applies to the oversight of TSX, TSX Venture Exchange Inc., formerly the Canadian Venture Exchange Inc. (TSX Venture Exchange), the Bourse de Montréal and the Winnipeg Commodity Exchange.

Like the original MOU, the revised MOU is based on a lead regulator model. The lead regulator is responsible for conducting an oversight program of the exchange or QTRS. Appendix A to the revised MOU contains a list of the lead, exempting and participating regulators for each exchange. Appendix B refers to the procedures for review and approval of changes to regulatory instruments applicable to each exchange. Appendix C sets out additional information the OSC, as lead regulator of TSX, has agreed to provide to the ASC and BCSC, as lead regulators for the TSX Venture Exchange. Each of the appendices may be amended from time to time to reflect changes.

Unlike the original MOU, Tthe revised MOU also contains a termination provision in the event of non-performance or change in ownership, structure or operations of an exchange or QTRS.

In order to have a coordinated effective date, the parties have agreed that, in Alberta, British Columbia, Ontario and Manitoba, the revised MOU will come into effect on the date it is approved by the Minister of Finance in Ontario and that, in Québec, the MOU will come into effect on the date the CVMQ signs it.

COR#02/034, COR#02/097 and the revised MOU are attached.

September 13, 2002

Douglas M. Hyndman
Chair

Ref: COR#02/034
 COR#02/097

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