NIN 98/68 - Proposed National Policy 12-201 Mutual Reliance Review System for Exemptive Relief Applications [NIN - Rescinded]

The Commission, together with the other members of the Canadian Securities Administrators (the "CSA"), is publishing for comment the text of proposed National Policy 12-201, which is intended to establish a mutual reliance review system for exemptive relief applications.

The proposed National Policy is an initiative of the CSA and is expected to be adopted as a policy in all the jurisdictions represented by the CSA.

Background

The proposed National Policy was published for comment as a Concept Proposal in January 1998. The comment period ended June 1998. Testing of the system commenced in March 1998 and will continue until its implementation. Testing of the system after publication of the proposed National Policy will be based on the proposed National Policy and not the Concept Proposal.

Summary of Comments

Eight industry comments were received on the Concept Proposal. The comments received were generally supportive of the system and an increasing number of filers are electing to use the system as testing continues. To date approximately 90 applications have been filed under the system and approximately one half of these applications have been completed. The CSA would like to thank commentors for providing their comments on the Concept Proposal.

Attached as Appendix A is a summary of the comments received and a discussion of how the proposed National Policy differs from the Concept Proposal as a result of both these comments, and the experience gained through testing.

All members of the CSA and 30 law firms are currently participating in testing. Other persons will be included upon request. Any person wishing to participate in testing should contact a member of the Exemptive Relief Applications Committee listed below.

Substance and Purpose of the Proposed National Policy

The proposed National Policy establishes a mutual reliance review system for exemptive relief applications filed in more than one jurisdiction. The mutual reliance review system ("MRRS") is an understanding between the CSA on the principles of mutual reliance and is being implemented by way of a memorandum of understanding (the "MOU"). The draft MOU was published for comment in June 1998 under NIN#98/29. The Commission also published for comment proposed National Instrument 31-101 and Companion Policy 31-101CP, which established the MRRS for Registration (the "Registration Rule"), and proposed National Policy 43-201 which established the MRRS for Prospectuses and Initial AIFS (the "Prospectus Policy") (see NIN#98/30 and #98/31). While the draft MOU sets out the roles and responsibilities assumed by the CSA under the MRRS generally, the proposed National Policy sets out the specific requirements of the MRRS for exemptive applications. It is intended that the proposed National Policy, upon implementation, be added to the list in Appendix A of the MOU.

Summary of the Proposed National Policy

A summary of the MRRS principles as they apply to the filing and review of exemptive relief applications is discussed below. The discussion also highlights differences between the proposed National Policy and the Concept Proposal. Attached as Appendix B is a flowchart showing the operation of the system.

• A filer is eligible to elect to use the system for any application made to more than one securities regulatory authority, except for those applications for which the granting of exemptive relief can be evidenced by a MRRS decision document issued under the Prospectus Policy or by a certificate of registration.

• A filer electing to use the system for an application is responsible for selecting a principal regulator for the application in accordance with the guidelines set out in the proposed National Policy. These guidelines mirror similar provisions in the Registration Rule and the Prospectus Policy and are generally based on the location of the head office of the filer or the connection of the filer to a jurisdiction. The proposed National Policy clarifies the procedure for changing the principal regulator for an application.

• The proposed National Policy provides a process for pre-filing discussions on applications. If the principal regulator determines that the pre-filing discussion is of a routine nature, it will be dealt with by the principal regulator. If the principal regulator determines that the pre-filing discussion involves a novel and substantive issue or a novel public policy issue, the proposed National Policy provides for a consultative process between securities regulatory authorities. The process is similar to that provided for in the Prospectus Policy and expands the process that was set out in the Concept Proposal.

• The proposed National Policy provides more guidance than the Concept Proposal on the contents of applications and on how applications should be made by filers electing to use the system. As under the Concept Proposal, applications together with application filing fees should be filed concurrently in all jurisdictions. The proposed National Policy clarifies that if applications are not filed concurrently in all jurisdictions or are incomplete ordeficient,the timing of the review may be affected.

• A single application document should be drafted referencing the relevant legislative provisions of the principal regulator. The proposed National Policy contains a new provision that the application should contain footnotes or be accompanied by a table of concordance clearly referencing all the relevant legislative provisions of all non-principal regulators where the application will be made. The application should also contain analysis where the provisions of the legislation of the non-principal regulators differs from that of the principal regulator.

• Generally only the staff of the principal regulator will communicate with the filer on an application.

• There will be no surrender of the exercise of discretion by any securities regulatory authority under the system. All securities regulatory authorities will exercise their discretion to grant or deny exemptive relief on an application however, non-principal regulators will rely on the review and analysis of the application by the staff of the principal regulator.

• The staff of the non-principal regulators will have seven business days (rather than ten business days as set out in the Concept Proposal) to review the application and notify the staff of the principal regulator of substantive issues on an application that in the view of staff may, if left unresolved, cause the non-principal regulator to opt out of the system for the application. The staff of the principal regulator can abridge this time period for review if they decide the circumstances warrant an abridgement.

• Once the staff of the principal regulator has completed their review of an application (having the benefit of the substantive comments of the staff of the non-principal regulators), they will notify the staff of the non-principal regulators of their recommendation and forward the recommendation to the principal regulator for a decision on the application.

• Once the principal regulator has made a decision on an application, the staff of the principal regulator will forward their staff memorandum and recommendation and the decision of the principal regulator on the application to the non-principal regulators involved in the application. The staff memorandum must identify substantive comments received from the staff of the non-principal regulators and the view of the staff of the principal regulator on these comments.

• Non-principal regulators have seven business days to decide whether to make the same decision as the principal regulator on an application or whether to opt out of the system for the application. The principal regulator cannot abridge this time period but only request that the non-principal regulators attempt to make their decisions in a shorter period.

• The proposed National Policy maintains the process established in the Concept Proposal for opting out. A non-principal regulator may opt out of the system on an application by advising the filer, the principal regulator and the other non-principal regulators of its decision to opt out and its reasons for doing so. The non-principal regulator that has opted out will continue its review of the application, deal directly with the filer, make a decision with respect to the application and issue its own decision document. A non-principal regulator that has opted out can opt back in at any time prior to the end of the opting out period set out in the proposed National Policy.

• Silence by a non-principal regulator on an application is deemed to be an opting out of the system for an application. The proposed National Policy establishes a new procedure to ensure there is no unintended opting out of the systemby a non-principal regulator as a result of silence. Staff of the principal regulator will send a reminder by facsimile to all non-principal regulators who have not responded within five business days of the opt out period.

• The decision of the principal regulator on an application will not be released to the filer until the end of the opting out period set out in the proposed National Policy unless all non-principal regulators have communicated their decisions on the application prior to the end of that period.

• Once a decision has been made by all non-principal regulators, the principal regulator will issue a MRRS decision document evidencing the decision of the principal regulator and all non-principal regulators that have not opted out of the system for the application. The decisions of all securities regulatory authorities and the MRRS decision document will have the same effective date and the same terms and conditions.

• The Commission des valeurs mobilières du Québec will concurrently issue its own local decision on the same terms and conditions as the MRRS decision document and will make it available to filers.

• The proposed National Policy clarifies that if exemptive relief is needed for part of a transaction or matter the exemptive relief will be granted for the whole transaction or matter and a filer will look to the MRRS decision document for the exemptive relief for the whole transaction or matter and will not rely upon any statutory exemptions for portions of the transaction or matter.

• The proposed National Policy clarifies that the MRRS decision document will reflect the securities legislation and securities directions of the principal regulator on an application. This may mean that similar transactions or matters may be subject to different terms and conditions, for example different resale restrictions, depending on which jurisdiction acts as principal regulator on an application.

• The time periods under the system have been set to ensure that all securities regulatory authorities have sufficient time to exercise their discretion on an application.

Anticipated Costs and Benefits

The proposed National Policy will reduce unnecessary duplication in the review of exemptive relief applications filed in more than one jurisdiction and is an important step towards increasing efficiency. In the long term use of the system may lead to increased harmonization of approaches taken by securities regulatory authorities on issues and possibly increased harmonization of legislation.

Comments

Interested parties are invited to make written submissions with respect to the proposed National Policy. Submissions received by February 28, 1999 will be considered.

Submissions should be made to all Canadian securities regulatory authorities listed below in care of the Saskatchewan Securities Commission in duplicate, as indicated below:

British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
Manitoba Securities Commission
Ontario Securities Commission
Commission des valeurs mobilières du Québec
Nova Scotia Securities Commission

c/o Dean Murrison, MRRS for ERA Committee Chair
Saskatchewan Securities Commission
800, 1920 Broad Street
Regina, Saskatchewan S4P 3V7
Telephone: 306-787-5879
Fax: 306-787-5899
e-mail: dean.murrison.ssc@govmail.gov.sk.ca

A copy of all submissions should also be forwarded to the Commission des valeurs mobilières du Québec as follows:

Claude St Pierre
Secretary
Commission des valeurs mobilières du Québec
Tour de la Bourse
C.P. 246, 22nd Floor
Montreal, Quebec H4Z 1G3

A diskette containing the submission (in DOS or Windows format, preferably Word Perfect) should also be submitted to the Chair of the Committee.

Comment letters submitted in response to requests for comments are placed on the public file in certain jurisdictions and form part of the public record, unless confidentiality is requested. Comment letters will be circulated amongst the securities regulatory authorities, whether or not confidentiality is requested. Although comment letters requesting confidentiality will not be placed on the public file, freedom of information legislation in certain jurisdictions may require the securities regulatory authorities in those jurisdictions to make comment letters available. Persons submitting comment letters should therefore be aware that the press and members of the public may be able to obtain access to any comment letters.

Questions and/or requests to participate in testing may be referred to any of the following members of the MRRS for exemptive relief applications committee:

Margaret Sheehy
British Columbia Securities Commission
865 Hornby Street, 2nd Floor
Vancouver, British Columbia V6Z 2H4
Telephone: (604) 899-6650
Fax: (604) 899-6700
e-mail: msheehy@bcsc.bc.ca

Marsha Manolescu
Alberta Securities Commission
19th Floor, 10025 Jasper Avenue
Edmonton Alberta T5J 3Z5
Telephone: (403) 422-1914
Fax: (403) 422-0777
e-mail: Marsha.Manolescu@gov.ab.ca

Douglas Brown
Manitoba Securities Commission
1130 - 405 Broadway
Winnipeg, Manitoba R3C 3L6
Telephone: (204) 945-0605
Fax: (204) 945-0330
e-mail: dbrown@cca.gov.mb.ca

Margo Paul
Ontario Securities Commission
20 Queen Street West, Suite 800 Box 55
Toronto, Ontario M5H 3S8
Telephone: (416) 593-8136
Fax: (416) 593-8244
e-mail: mpaul@osc.gov.on.ca

Sylvie Lalonde
Commission des valeurs mobilières du Québec
Tour de la Bourse
C.P. 246, 22nd Floor
Montreal, Quebec H4Z 1G3
Telephone: (514) 940-2199 ext. 4555
Fax: (514) 864-6381
e-mail: sylvie.lalonde@cvmq.gouv.qc.ca

Shirley Lee
Nova Scotia Securities Commission
1690 Hollis Street, 2nd Floor
Halifax, Nova Scotia B3J 3J9
Telephone: (902) 424-5441
Fax: (902) 424-4625
e-mail: leesp@gov.ns.ca

DATED at Vancouver, British Columbia, on November 19, 1998

Douglas M. Hyndman
Chair

The following summarizes industry comments received on the concept proposal and discusses how the policy differs from the concept proposal as a result of both these comments, and the experience gained through testing.

General Comments

All but one of the comments received were supportive of the mutual reliance concept and of ERA. One commentor liked the concept of testing ERA prior to implementation and suggested this approach should be used more often.

One commentor indicated ERA fell short of a "virtual national securities commission" and did not offer the "efficiency and consistency that might be expected of administration by a single jurisdiction".

Response: The CSA feels there is general support for ERA as evidenced by the increasing number of filers electing to use ERA for an increasing variety of applications.

SEDAR

Three commentors strongly encouraged mandating the use of SEDAR for applications as soon as practicable.

Response: The CSA supports the use of SEDAR for applications and for ERA.

This will create efficiencies in the processing of applications under ERA by facilitating the concurrent filing of applications with all securities regulatory authorities, the payment of fees and the communication with applicants and among securities regulatory authorities.

The MRRS for Exemptive Relief Applications Committee (the "Committee") will prepare a proposal for mandating the use of SEDAR for applications and ERA for the SEDAR Working Group to review.

Fees

Three commentors suggested that ERA should result in reduced fees given the reduced level of review required by non-principal regulators. They also suggested that fees should be standardized across jurisdictions with possibly a flat principal regulator and non-principal regulator fee.

Response: The CSA has noted these comments. The CSA cannot consider this issue in the context of ERA alone.

Format

The format of the policy has been drafted to conform as much as possible to the format of the Memorandum of Understanding - Mutual Reliance Review System ( the "MOU") and the instruments for the MRRS for Registration (the "registration rule") and MRRS for Prospectuses and Initial AIFS (the "prospectus policy") published for comment by the CSA. Also, the order in which various sections of the policy appear and the titles of those sections have been changed to more closely reflect other MRRS instruments. Information on the ongoing operations of the CSA and training have been moved to the MOU as the information is applicable to all MRRSs.

Authority

One commentor stated that the authority to adopt ERA was unclear. The commentor suggested that a discussion of the authority of each securities regulatory authority to enter into an agreement regarding ERA be included in the request for comment published with the policy. It was felt this would lead to legal certainty.

One commentor does not support the retention of discretion by all securities regulatory authorities contemplated by ERA. The commentor also suggested that non-principal regulators should not be able to opt out, at least not on all types of applications.

Response: It is not felt that ERA will create legal uncertainty. This has not been an issue during testing ERA.

As Canadian securities legislation does not allow Canadian securities regulatory authorities to delegate decision making power to other Canadian securities regulatory authorities, ERA does not contemplate that a securities regulatory authority give up the exercise of its discretion. Each securities regulatory authority will make its own decision on an application based on the merits of the matter.

All securities regulatory authorities currently have processes for processing applications. This does not create legal uncertainty. Writing the process down or agreeing to use the same process as another regulator if it proves to be good process does not change this.

ERA only sets out a process that each securities regulatory authority intends to follow in exercising its discretion. As long as the principles of natural justice are adhered to, each securities regulatory authority is entitled to determine the process to be followed in exercising its discretion. ERA does not offend the principles of natural justice. Relying on the work of qualified and trained staff (even staff not in your direct employ) does not offend these principles or the provisions of the legislation of any jurisdiction as long as the decision is made by the securities regulatory authority .

As ERA is not mandatory, a filer electing to use ERA would be indicating acquiescence to the process in any event.

Part 1 of the Policy "Interpretation"

Definitions in the policy have been drafted to reflect those used in other MRRSs. Some definitions of a more general nature now appear in the MOU instead of the policy.

Part 2 of the Policy "Overview and Application"

One commentor indicated that networking and selling arrangement applications should be dealt with under ERA.

There have been inquiries from staff of some securities regulatory authorities as to whether ERA should be available for applications for relief from the provisions of National Policy No. 39 "Mutual Funds" ("NP 39").

Response: ERA could work for applications for relief from the provisions of NP 39 but this would require a change to NP 39 (which is presently being reformulated by the CSA Mutual Funds Committee). We understand the CSA Mutual Funds Committee is currently reviewing this issue in the context of this reformulation.

The policy has been drafted to clarify the types of applications which may be filed under ERA. ERA can be used for any application for exemptive relief unless the issuance of a certificate of registration or a prospectus receipt can evidence the granting of the relief.

Part 3 of the Policy "Principal Regulator"

One commentor indicated that a filer should be able to redesignate a principal regulator where it is determined that the relief is not required from the principal regulator and deal with the remaining securities regulatory authorities without having to reapply. The commentor suggested it should be clear in the policy which securities regulatory authorities have agreed to act as principal regulators under ERA.

Response: The CSA agrees with the commentor and the changes suggested have been made.

Other additions have been made to the policy to allow for the changing of the principal regulator in certain situations and to make ERA consistent with the MOU.

Part 4 of the Policy "Pre-filing Discussions"

One commentor suggested that a method should be built into the process for pre-filing discussions under ERA to ascertain the views of securities regulatory authorities other than the principal regulator on a matter. The commentor felt it was important to ascertain these views early in the process to avoid issues arising later.

Response: The CSA agrees with the commentor. As pre-filing discussions on exemptive relief applications and prospectuses for a particular matter often take place at the same time, we have drafted Part 4 "Pre-filing Discussions" of the policy to mirror the prospectus policy to the extent appropriate for applications. This change would address the above comment as well.

Part 5 "Filing of Materials Under MRRS"

One commentor supported the elimination of the requirement to draft an application for each securities regulatory authority but suggested the application and the fee be forwarded to the principal regulator who would then circulate the application to all securities regulatory authorities involved and divide the fee amongst them.

Response: The CSA feels that the use of SEDAR would address this comment. Until the use of SEDAR is mandated for applications it is felt that the circulation of applications and collection of fees by principal regulators would be an undue burden on principal regulators. As applications will be made in one document for all securities regulatory authorities, the forwarding of applications with fees to securities regulatory authorities by filers would not be an undue burden on filers. It is also uncertain whether all securities regulatory authorities could collect fees on behalf of other securities regulatory authorities without legislative changes.

Two commentors supported the removal of all statutory references from the application except for those of the principal regulator while one commentor did not as it felt this would lead to decisions with no statutory references, uncertainty and little use of ERA.

Response: The policy requires an application contain statutory references to the legislation of all jurisdictions where the application is made, not just those of the principal regulator. Statutory references to the legislation of non-principal regulators may be set out in footnotes to the application or in a table of concordance accompanying the application. The application should also contain an analysis of how the legislation of all the non-principal regulators involved differs from that of the principal regulator. This analysis can also be put in footnotes to the application. Some of the applications filed under ERA during testing have contained this information. Filers must carry out a review of all jurisdictions’ legislation in any event and staff have indicated that it is very helpful to have this information for the efficient review of applications due to differences in legislation.

Five commentors requested clarification on the translation to French of applications filed under ERA.

There have been comments from filers during testing that the requirements for the translation into French of applications using ERA were not consistent with, and were more onerous than, the requirements for applications made outside ERA.

Response: The Commission des valeurs mobilières du Québec (the "CVMQ") will require that a French version of the draft MRRS decision document be filed with it in all cases where it is the principal regulator.

One commentor suggested there should be clarification on how novel or complex applications will be dealt with under ERA such as those types of applications, if any, where the use of ERA is not appropriate as well as addressing how to make applications where not all the relief, or not the same degree of relief, is required from all securities regulatory authorities. The commentor suggested it should still be possible to use ERA and make the application for all the relief needed in one document.

Response: More guidance has been provided in the policy and including examples to clarify to filers when and how applications should be made under ERA.

Applications which could lead to the designation of more than one principal regulator, for example when not all heads of relief are required from the securities regulatory authority that would otherwise be designated the principal regulator, have been discussed.

A filer should still be able to use one application document for this type of application and the designation of two principal regulators has worked during testing. It would result in two MRRS decision documents and the filer dealing with two securities regulatory authorities.

The policy makes it clear that where there is an efficiency to be gained by designating a different principal regulator for an application the filer may apply for a change of principal regulator or the securities regulatory authorities may decide to change the principal regulator for the application.

The policy provides information on the consequences of filing incomplete or deficient applications or not concurrently filing the application with all securities regulatory authorities involved (which has been a consistent problem during testing).

One commentor suggested there should be time lines for the principal regulator’s acknowledgement of the receipt of applications to the non-principal regulators similar to the time lines for issuing preliminary receipts.

Response: It was not felt this was necessary as the example cited occurred early in testing and the circumstances that prompted the inquiry have not occurred since. The use of SEDAR for applications would also address this concern.

Part 6 of the Policy "Review of Materials"

Five commentors were concerned about the length of time it would take for an application to be processed under ERA. For some applications it was suggested it might be longer than it takes currently outside ERA and the commentors questioned whether ERA would be used for urgent matters such as applications involving take over bids. One commentor supported ERA not being made mandatory especially for such urgent matters. One commentor suggested it would take longer to review applications because there is no input from the actual non-principal regulators until late in the process. One commentor suggested ERA would not shorten the review time for applications. The commentors suggested that a time line should be imposed on the staff of the principal regulator’s review of an application. One commentor suggested that this period be 5 business days after the staff of the non-principal regulators’ comments are received. One commentor suggested that this period be ten business days after the staff of the non-principal regulators’ comments are received which could be abridged or extended. The commentors felt this would provide some certainty for filers.

One commentor objected to the principal regulator not having to forward the comments of non-principal regulators to filers. It was felt that this erects a barrier between filers and non-principal regulators that is contrary to all other systems the CSA has developed where principal regulators act as conduits between filers and securities regulatory authorities and precludes filers from knowing of problems until late in the process when there is an opt out.

Response: The policy :

• allows the staff of the principal regulator to refer the filer to the staff of a non-principal regulator in exceptional circumstances;
• reduces the staff of the non-principal regulator’s review time from ten business days to 7 business days;
• clarifies the type of comments the staff of a non-principal regulator should make to be consistent with other MRRSs;
• clarifies the process where an application is made to a securities regulatory authority where no relief is needed (an issue which arose several times during testing); and 
•  clarifies when the staff of the non-principal regulator’s review time can be abridged by the staff of the principal regulator.

The policy does not set time lines for the review of applications by the principal regulator as it is impossible to know what length of time is needed by the principal regulator to do a full review of an application . The time required will vary depending on the type and the complexity of the application.

It is felt that the time lines set for an application to be processed through ERA are practical for most applications. Testing has shown that there is flexibility and the ability to deal with most applications under ERA including those that are unusually complex or urgent.

There was discussion on whether comments of the staff of the non-principal regulators on an application should be communicated to the staff of the principal regulator after the staff of the principal regulator has commented on an application to the staff of the non-principal regulators as opposed to before.

No changes were made to the policy as it is important that the review of an application begin concurrently in all jurisdictions. There are benefits to the filer and the staff of the principal regulator having the comments from the staff of the non-principal regulators’ sooner rather than later. Issues can be identified earlier and communicated to filers. Staff of principal regulators can draft their materials with the benefit of these comments rather than risk the possibility of having to redraft materials should a comment be raised by the staff of a non-principal regulator after the completion of the review by the staff of the principal regulator which could lengthen the application review process.

To require the staff of the principal regulator to act as a conduit and forward the comments of the staff of non-principal regulators to the filer is contrary to the mutual reliance concept.

Part 7 of the Policy "Decision of Principal Regulator"

The policy requires the staff of the principal regulator to send a reminder to those securities regulatory authorities who have not informed the principal regulator of their decision within 5 business days. Experience with testing has indicated that this would be useful.

Part 8 of the Policy "Decision of Non-principal Regulators"

One commentor suggested that non-principal regulators should only have 5 business days to make their decision after receiving the principal determination documents as a filer could be seriously disadvantaged by an opt out which could occur late in the process.

One commentor suggested that the 7 business days for non-principal regulators to make a decision should be abridgeable at the option of the principal regulator.

Response: No changes were made to shorten the opt out period for non-principal regulators as the time lines currently provided are the minimum required for non-principal regulators to exercise their discretion.

The policy has not been drafted to make the opt out period abridgeable by the principal regulator as this was seen as fettering the discretion of the non-principal regulators.

The principal regulator can only request but not require a shorter opt out period and the experience in testing has been that when a shorter opt out period has been required non-principal regulators have obliged.

Part 9 of the Policy "Opting Out of the MRRS"

One commentor suggested the fact that the non-principal regulators make their decision after the principal regulator creates unease or uncertainty until later in the process than is the case under the process used now to deal with applications. It was suggested this perception may be created by the fact that there is no communication between filers and non-principal regulators.

Response: It is not felt that there should be uncertainty as staff of the non-principal regulators will have raised any substantive issues on an application with the staff of the principal regulator early in the review process and it is likely the filer will be aware of it.

One commentor suggested it was unclear who was making the decision to opt out of ERA on an application. The commentor went on to say it should be made clear that if a securities regulatory authority opts out a filer does not have to reapply and pay additional fees to continue the application with that securities regulatory authority. It was felt a securities regulatory authority should not have to opt out of ERA just because all the relief was not required from that securities regulatory authority.

Response: The CSA agrees with the commentor and the policy has been clarified where required.

One commentor felt that the policy should be clear that if a securities regulatory authority opts out of ERA on an application that the filer should be able to deal with the securities regulatory authority directly on the application.

Response: The CSA agrees that this is the intention and the policy has been clarified.

Part 10 of the Policy "Effect of Silence"

Five commentors suggested silence should be deemed to be opting into the decision as opposed to opting out of a decision. One suggested this would be an incentive for non-principal regulators to consider applications in a timely manner. One felt opting out is a serious matter and should require a positive act. One commentor felt there should be a differentiation between when the decision maker is a securities regulatory authority or a regulator. Three commentors commented on the serious confusion of an unintentional opting out through silence. One commentor suggested there should be a special provision in the policy for any securities regulatory authority which has difficulties with this approach.

Response: The policy has been drafted to retain the concept that silence is a deemed opting out of ERA for a particular application and given the nature of the relief granted, a positive act indicating an exercise of discretion is felt to be the wisest course. MRRS decision documents are not standardized like registration certificates or prospectus receipts. Each decision is quite unique and a positive indication that the decision reflects each non-principal regulator’s decision is felt necessary. It appears that more harm could come from deeming a securities regulatory authority to have opted in through silence if the securities regulatory authority has not actually exercised its discretion to opt in than from deeming a securities regulatory authority to have opted out through silence if the jurisdiction has actually exercised its discretion to opt in. In the former case there is a decision made available to the filer that represents a decision not actually made and in the latter the securities regulatory authority could simply issue its own decision to remedy the situation.

Testing has not shown this approach to be a problem.

Part 11 of the Policy "MRRS Decision Document" and "Schedule A" to the Policy

One commentor indicated decisions should not be so generic that they have no precedential value.

One commentor suggested decisions should make it clear what relief is being granted and more importantly what relief is not being granted by each securities regulatory authority. One commentor cautioned that generic MRRS decision documents might lead to uncertainty and would like legislative references of all securities regulatory authorities involved in the MRRS decision document. The commentor inquired as to how amendments of MRRS decision documents will be dealt with especially if the amendment is required from only one securities regulatory authority. One commentor does not support the issuing of local decisions.

Response: The CSA has clarified the policy and the sample form of MRRS decision document in Schedule A to deal with these comments. This has not been a problem during testing ERA.

All securities regulatory authorities will make their own decision on an application under ERA. There has been discussion about which securities regulatory authorities are required by their legislation to issue their own written form of the decision on an application under ERA.

The CVMQ will always issue its own written form of a decision on an application under ERA. The written form of the decision of the CVMQ on an application under ERA will always have the same effective date and the same terms and conditions as the MRRS decision document on the application and the CVMQ will always be named in the MRRS decision document.

The securities regulatory authorities of all other jurisdictions will not issue their own written form of a decision on an application under ERA and the filer can rely on the MRRS decision document as evidence of the decisions of these securities regulatory authorities on the application.

The policy has been drafted to reflect that if exemptive relief is needed for part of a transaction or matter the exemptive relief will be granted for the whole transaction or matter. Therefore, a filer will look to the MRRS decision document for the exemptive relief for the whole transaction or matter and will not rely upon any statutory exemptions for portions of the transaction or matter.

The MRRS decision document will reflect the securities legislation and securities directions of the principal regulator on an application. This may mean that similar transactions or matters may be subject to different terms and conditions, for example different resale restrictions, depending on who acts as principal regulator on an application.

MRRS decision documents will use the words "decision maker" to address the fact that in some jurisdictions the decision making authority rests with the staff and in others with the securities regulatory authority.