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Securities Law

NIN 99/44 - Over-the-Counter Derivatives [NIN - Rescinded]

Published Date: 1999-11-26
Effective Date: 1999-11-24
The Securities Amendment Act, 1999, S.B.C. 1999, c. 20, came into effect on June 29, 1999 (see NIN#99/27). Among other things, it amended the definition of "futures contract" and added a definition of "commodity". As a result of comments received following the amendment, the Commission has been considering an appropriate regulatory framework for over-the-counter derivatives.

As an interim step, the Commission is publishing three blanket orders and a companion policy to exempt certain types of over-the-counter derivatives from the provisions of the Act and to enable certain parties to enter into over-the-counter derivatives without being subject to the registration and prospectus requirements of the Act.

Blanket Order 91-501 (BC) exempts trades in over-the-counter derivatives between Qualified Parties, as defined, from the registration and prospectus requirements of the Act, where the parties are acting as principal. Companion Policy 91-501CP (BC) describes the background and purpose of BOR#91-501 (BC) and also provides further explanation of the relief provided.

Blanket Order 91-502 (BC) excludes short term foreign exchange transactions from the definition of "futures contract". Blanket Order 91-503 (BC) excludes contracts providing only for the physical delivery of commodities from the definition of "futures contract".

The Alberta Securities Commission has exempted certain over-the-counter derivatives from the provisions of the Alberta Securities Act and the Ontario Securities Commission is proposing a rule to deal with over-the-counter derivatives. The
Commission intends to pursue efforts to harmonise the approaches of the Canadian securities regulatory authorities to the regulation of over-the-counter derivatives.

DATED at Vancouver, British Columbia, on November 24, 1999.

Douglas M. Hyndman

Ref: NIN#99/27