The Ontario Securities CommissionPeter Power/The Globe and Mail
The target date for the implementation of sweeping new derivatives rules is fast approaching, prompting provincial securities regulators to release their proposed rules that will govern all derivatives trades in the future.
For the past two years, these regulators have worked together to put out five different papers on derivatives issues – and three are still to come – but on Thursday they revealed their first formal proposals for regulation that will become law. Market participants have 60 days to reply, after which the regulators hope to implement the legislation next July.
The new proposals are lengthy and go into heavy detail, but one of the chief things they do is define what types of derivatives must be posted to a repository – something the regulators refer to as the 'scope rule.' At times, the Securities Act has overlapping definitions of the terms 'derivative' and 'security,' so the regulators wanted to get specific.
Once the new rules are implemented, regulators will be able to monitor all of the derivatives trades in Canada.
To get them right, Kevin Fine, the Ontario Securities Commission's director for derivatives said in an interview that the OSC has held extensive one-on-one meetings with market participants and attended numerous conferences at which all of the thorny issues are discussed. The OSC is also on the derivatives task force of the International Organization of Securities Commissions, giving them access to all of the international debates.
Outside of Canada, Europe's new rules for derivatives posting/recording are expected to be in place next year, while some U.S. dealers will be forced to start posting in January, 2013, but the situation there is much murkier, and only certain dealers will be bound to the new rules.
Tim Kiladze