The Expert Panel on Securities Regulation released its Final Report and
Recommendations entitled "Creating an Advantage in Global
Capital Markets" on January 12, 2009. The Expert Panel was
established by the federal Minister of Finance to provide advice
and recommendations on various areas of securities regulation. Its
key recommendations include establishment of a single securities
regulator to administer a national securities act, establishment of
an independent adjudicative tribunal, advancing a more
principles-based approach to securities regulation and modernizing
Canada's approach to the regulation of derivatives. Along with
its Final Report the Expert Panel also published a draft national
Securities Act to serve as a starting point for the development of
national legislation to govern Canadian capital markets.
With respect to derivatives, the Expert Panel recommends
adopting a common regulatory basis for the regulation of
exchange-traded derivatives. Specifically, the Expert Panel has
endorsed an approach similar to that taken by British Columbia and
Alberta through provincial securities legislation and by Ontario
through its Commodity Futures Act. Reflecting this
recommendation, the draft national Securities Act provides for the
regulation of exchange-traded derivatives by imposing registration
requirements on those who trade in exchange contracts and by
requiring that exchanges facilitating the trading and clearing of
exchange contracts be recognized and their form of contract be
accepted by the securities regulator. The Expert Panel also favours
more regulatory oversight for over-the-counter (OTC) derivatives
under the authority of a national securities regulator. However, it
deferred making any specific recommendations on an appropriate
regulatory approach, advocating instead that the national regulator
have sufficient policy depth and resources to determine the best
approach to the regulation of OTC derivatives working in
conjunction with regulators in the United States and in other
jurisdictions who are undertaking similar reviews of OTC
The Expert Panel recommends a voluntary approach for
transitioning from thirteen separate regulators to a single,
national regulator. Until all provinces and territories choose to
participate in a common regulatory scheme, the Expert Panel
recommends that the federal government consider a transition
feature to allow some market participants to opt-in to exclusive
regulation under the national regime.
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The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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