NIN 96/13 - National Instruments and National Policies [NIN - Rescinded]

The Commission is publishing for comment the proposed rule in respect of the System For Electronic Document Analysis and Retrieval ("SEDAR") in a Special Supplement to the Weekly Summary of May 10, 1996 (see NIN#96/14). This is the first rule the Commission proposes to make under its rule making regime. It is also the first rule proposed to be made in more than one Canadian jurisdiction. SEDAR is being described as a "National Instrument" by each jurisdiction.

The adoption of National Instruments and National Policies (as described below) represents a continuation by the Canadian Securities Administrators of their efforts in promoting and maintaining harmonization and consistency among jurisdictions in the context of the new rule or regulation making regimes that have now come into effect in several provinces. To assist market participants in understanding this aspect of rule making, this notice explains the concept of National Instruments and National Policies.

A review of existing National Policy Statements and other instruments previously issued by the Ontario Securities Commission is currently under way. The National Policy Statements that will be maintained as a result of this review will be replaced by National Instruments and National Policies.

National Instruments will be legislative in nature. They will be adopted, in most cases, as rules or regulations in jurisdictions in which the securities commission or similar body has rule or regulation making power and as policies in jurisdictions without rule or regulation making power. The manner in which a National Instrument will be made by a particular jurisdiction will vary depending on the legislative framework in place in that jurisdiction. A National Instrument will be made as a rule in British Columbia under section 159.1 of the Securities Act.

National Policies will not be legislative in nature but will set out principles or criteria relating to the exercise of discretion by the applicable securities commission or similar body or their staff, the manner in which they interpret their respective legislation and the practices generally followed by them in the performance of their duties. National Policies will be adopted as policies by all jurisdictions that adopt them.

National Instruments and National Policies are being drafted generically so that, to the extent practicable, they can be adopted or made in the same form by each jurisdiction. Accordingly, a National Instrument or National Policy will not generally refer to a particular jurisdiction or the legislation of a particular jurisdiction. Instead, National Instruments and National Policies will make use of terms such as "securities legislation", "securities regulatory authority", "regulator" and "local jurisdiction". To assist in interpretation, it is contemplated that a National Instrument will be made setting out definitions of these and certain other terms that will be used with common meaning in National Instruments and National Policies. Until this National Instrument is published for comment, proposed National Instruments will set out the meanings of any common terms in a footnote. The proposed National Instrument for definitions will also provide that a term used in a National Instrument and defined in the securities legislation of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the securities legislation, will, for the purposes of that jurisdiction, have the meaning given to it in the securities legislation of that jurisdiction.

A user applying a National Instrument to matters in British Columbia will read "securities legislation" to mean the British Columbia statute, regulation and rules, "securities regulatory authority" to mean the British Columbia Securities Commission, "regulator" to mean the Executive Director and "local jurisdiction" to mean British Columbia. A user applying a National Instrument with respect to matters in another jurisdiction will read "securities legislation" as that term is defined for that jurisdiction in the proposed National Instrument for definitions, "securities regulatory authority" to mean the securities commission or similar body in that jurisdiction, "regulator" as that term is defined for that jurisdiction in the proposed National Instrument for definitions and "local jurisdiction" to mean that jurisdiction. Generally, a National Instrument will not refer to "distributing securities in the local jurisdiction" or "filing in the local jurisdiction". Instead, it will refer to "distributing securities" or "filing". In that regard, a National Instrument should be read the same way as a user reads a statute, regulation or rule adopted locally which generally do not refer to the jurisdiction making them but apply based on activity in or a connection to the jurisdiction.

Each jurisdiction may opt out of or amend a particular provision of a National Instrument. A local instrument may be used to vary, or create exemptions under, local legislation, if necessary, to give proper effect to the National Instrument.

National Instruments that are of a prohibitive or mandatory nature (as opposed to exemptive in nature) will generally contain provisions allowing one or both of the securities regulatory authority or the regulator in a particular jurisdiction to grant an exemption to the National Instrument.

DATED at Vancouver, British Columbia, on May 8, 1996

Douglas M. Hyndman
Chair