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Securities Law

NIN 98/63 - Advance Notice - National Instrument 33-106 Year 2000 Preparation Reporting [NIN - Rescinded]

Published Date: 1998-10-16
Effective Date: 1998-10-14

Implementation of National Instrument on an Urgent Basis

The Commission is publishing proposed National Instrument 33-106, entitled "Year 2000 Preparation Reporting" (the "National Instrument"), which is an initiative of the Canadian Securities Administrators ("CSA"). The Commission received the consent of the Minister of Finance to make this rule on an urgent basis. The National Instrument is expected to be adopted by the Commission and to come into effect in British Columbia within the next few days. As the National Instrument will be adopted without prior publication for comment, it will remain in effect for only 275 days.

In Ontario, the National Instrument was made as an urgent rule under the relevant provisions of the Ontario Securities Act and is expected to be published in the October 16, 1998 issue of the OSC Bulletin. The National Instrument has been or is expected to be adopted as a rule in Alberta and Nova Scotia, as a commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the CSA. The exact timing and form of implementation may vary from jurisdiction to jurisdiction.

Purpose of National Instrument

Information technology systems are critically important to the administration and efficient functioning of the capital markets. The failure of one or more significant market participants to attain Year 2000 readiness could result in commercial disruption and have a wide reaching and systemic impact on the financial markets.

The Commission has already taken a number of initiatives, and has been working for some time with other securities regulators, to raise awareness of the issues surrounding the century date change, to promote prompt and appropriate action within the financial industry and to monitor the industry’s progress in implementing plans that will help it continue to function without major disruptions during the transition to the new millennium.

The National Instrument is an initiative of the CSA to promote prompt and appropriate preparations for the Year 2000 Problem among participants in the Canadian capital markets. Under the National Instrument, the Year 2000 Problem generally includes any problem caused by (i) computer software incorrectly reading the date "01/01/00" as being the year 1900 or another incorrect year; (ii) computer software incorrectly identifying a date in the year 1999 or any year after that; (iii) computer software failing to detect that the Year 2000 is a leap year; and (iv) any other computer software error that is directly or indirectly caused by the problems set forth in (i), (ii) or (iii) above.

The National Instrument requires registered firms (registered dealers, underwriters and advisors, other than individuals) to file with the regulator information concerning their preparation for the Year 2000 Problem. In particular, each registered firm is required to file, within specified periods, an initial survey concerning its preparations for the Year 2000 Problem and management certificates concerning the progress of those preparations.

A registered firm may fulfil its obligations under the National Instrument by filing the required information with a specified self-regulatory organization ("SRO") of which it is a member, provided that the SRO notifies the registered firm in writing that the SRO will file the information with the regulator.

The Commission intends to review and follow-up on the information provided in response to the survey and periodic management certificates as part of its on-going examination program of non-SRO firms. The Vancouver Stock Exchange and the Investment Dealers Association of Canada will also be monitoring the information they receive from SRO member firms.

Copies of the filings made under the National Instrument will also be available for public inspection in accordance with Canadian securities legislation in certain jurisdictions. This will enable investors and other interested parties to get information on the preparations of registered firms for the Year 2000.

The CSA is also considering whether to require reports by independent auditors on preparations by registered firms for the Year 2000 Problem. The National Instrument does not contain such a requirement.

Nature of the Urgency and the Risk

The Commission considers the information required by the National Instrument to be vital to the continued efficient operation of the capital markets in British Columbia and Canada. Inadequate preparation by registered firms for the Year 2000 Problem could impair the accuracy of investors’ investment records and the ability to effect trades and settle in a timely fashion.

The Commission believes that there is an urgent need for the National Instrument and that, without it, there is a substantial risk of material harm to investors and to the integrity of the capital markets.

Manner of Filing

All filings made under the National Instrument are required to be submitted electronically. A registered firm that is not a member of an SRO, as well as any SRO member firm that files directly with the regulator, may file the information required under the National Instrument in portable document format or in a format convertible into portable document format, either by diskette or by e-mail. Filings should be sent to the contact persons or e-mail addresses indicated below. Regulators not identified below should be contacted directly for filing instructions.

JurisdictionDiskette DeliveryE-mail

British Columbia Examination Administrator

Alberta Director, Capital Markets None

Manitoba Registrations Officer

Ontario General Manager,

Quebec Jean Lorrain, Directeur
de la conformité et de

An SRO member firm that files the required information with its SRO, rather than directly with the regulator, will be advised by the SRO as to the appropriate method of filing.

DATED at Vancouver, British Columbia, on October 14, 1998

Douglas M. Hyndman

Ref: Proposed National Instrument 33-106