Joint CSA/IIROC Staff Notice 21329 — Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements

21-0060
Type: Rules Notice> Guidance Note
Rule connection:
UMIR
Legacy DMR Rules
Distribute internally to:
Legal and Compliance
Senior Management
Trading Desk

Contact:

Victoria Pinnington
Senior Vice-President, Market Regulation & Policy
Telephone:
Email:

Part 1 – Introduction

The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC and, together with the CSA, we) are publishing this Notice to provide guidance on how securities legislation1applies to platforms (Crypto Asset Trading Platforms, or CTPs) that facilitate or propose to facilitate the trading of:

  • crypto assets that are securities (Security Tokens), or
  • instruments or contracts involving crypto assets, as indicated in CSA Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto-Assets (CSA SN 21-327) (Crypto Contracts).

This Notice also includes an overview of the applicable existing regulatory requirements and areas where there may be flexibility in how the requirements apply to CTPs, provided the key risks are addressed. Appendix A of this Notice includes a description of the key risks related to CTPs.

This Notice does not introduce new rules specifically applicable to CTPs, as CTPs are already subject to existing requirements under securities legislation in Canada. Rather, where appropriate, it provides guidance on how the existing requirements of securities legislation may be tailored through terms and conditions on the registration or recognition of CTPs and through discretionary exemptive relief with appropriate conditions. This approach allows CTPs to operate with appropriate regulatory oversight.

The overall goal of the approach outlined in this Notice is to ensure there is a balance between needing to be flexible in order to foster innovation in the Canadian capital markets and meeting our regulatory mandate of promoting investor protection and fair and efficient capital markets.

This Notice discusses CTPs that operate in a manner similar to marketplaces2 (referred to as “Marketplace Platforms”) and other CTPs that are in the business of trading Security Tokens or Crypto Contracts that are not marketplaces (referred to as “Dealer Platforms”).  In some situations, a CTP may be carrying out activities that have elements of both Marketplace Platforms and Dealer Platforms, and this Notice describes how existing regulatory requirements could apply to these CTPs. We note that, as this industry is still developing, a wide variety of CTP models are emerging. Depending on the business model and activities conducted by a CTP and the risks it creates, the regulatory treatment of one CTP may differ from another.

The guidance in this Notice focuses on CTPs that facilitate the trading of Security Tokens and/or Crypto Contracts. There may be platforms that facilitate the trading of other products or contracts that are structured as “traditional” derivatives and that also provide exposure to crypto assets (including commodity futures contracts, contracts for difference or swaps). We remind these platforms that they are subject to our jurisdiction and to existing regulatory requirements and that they should contact their local securities regulatory authority to discuss possible approaches to comply with securities legislation.3

In the future, the CSA plans to examine the regulatory framework that applies to dealers and marketplaces that trade over-the-counter derivatives more generally. Any proposal will be subject to the normal course process for consultation (including publication for comment).

The guidance in this Notice is intended to provide clarity regarding the steps that a CTP needs to take to comply with securities legislation, including interim steps that will allow a CTP to operate as they prepare to fully integrate into the Canadian regulatory structure. The CSA welcomes innovation. We recognize the continued evolution of fintech businesses, the infrastructure that supports such businesses, and both Canadian and foreign regulatory structures. This continued evolution may result in the tailoring of requirements or providing exemptions to accommodate their novel business and any developments, or result in alternative regulatory frameworks from the one described in this Notice being suitable for CTP business models. 

Part 2 – Background

Since the creation of Bitcoin in 2008, there has been growing investor interest in crypto assets and, in turn, a proliferation of CTPs that allow investors to trade these crypto assets. On March 14, 2019, the CSA and IIROC published Joint CSA/IIROC Consultation Paper 21-402 Proposed Framework for Crypto-Asset Trading Platforms (CP 21-402). In CP 21-402, we outlined a proposed regulatory framework for CTPs, with a focus on Marketplace Platforms, and solicited comments in a number of areas to better understand the industry, its risks, and how regulatory requirements may be tailored for CTPs operating as marketplaces in Canada.

We received 52 comments in response and thank all those that provided comments. A summary of comments and responses is attached at Appendix C of this Notice.

We also met with CTPs and consulted extensively with industry stakeholders on issues specific to CTPs.

After having considered this additional information, we are providing guidance for both Marketplace Platforms and Dealer Platforms that is generally consistent with CP 21-402, but also contemplates an interim regulatory approach. 

Part 3 – Application of Securities Legislation to CTPs

The requirements that will be applicable to a CTP will depend on how it operates and what activities it undertakes. Generally, this will depend on whether the CTP operates as a Dealer Platform or a Marketplace Platform.

Below, we describe characteristics of Dealer Platforms and Marketplace Platforms and provide guidance on steps for CTPs to take in order to comply with securities legislation. We also provide guidance on the application process.

Dealer Platforms

The two most common characteristics of a CTP that suggest it would be a Dealer Platform and not a Marketplace Platform are as follows:

  • it only facilitates the primary distribution of Security Tokens, and
  • it is the counterparty to each trade in Security Tokens and/or Crypto Contracts, and client orders do not otherwise interact with one another on the CTP.

CTPs that are Dealer Platforms may also be engaged in other activities or perform other functions that marketplaces typically do not undertake.  These include, but are not limited to:

  • onboarding of retail clients onto the CTP,
  • acting as agent for clients for trades in Security Tokens or Crypto Contracts, and
  • offering custody of assets, either directly or through a third-party provider.
  1. Registration Categories for Dealer Platforms

    The appropriate category of dealer registration for a Dealer Platform will depend on the nature of its activities.

    If the Dealer Platform only facilitates distributions or the trading of Security Tokens in reliance on prospectus exemptions and does not offer margin or leverage, registration as an exempt market dealer, or in some circumstances, restricted dealer may be appropriate, although this would not preclude the Dealer Platform from seeking registration as an investment dealer. Dealer Platforms may not offer margin or leverage for Security Tokens unless they are registered as an investment dealer and are IIROC members.

    Similarly, Dealer Platforms that trade Crypto Contracts are expected to be registered in an appropriate dealer category, and where they trade or solicit trades for retail investors that are individuals, they will generally be expected to be registered as investment dealers and be IIROC members, subject to the interim approach described below.

    In Québec, Dealer Platforms that are in the business of trading Crypto Contracts that are derivatives will be required to register as derivatives dealers under the Québec Derivatives Act (QDA). Dealer Platforms that also create and market derivatives must be qualified by the Autorité des marchés financiers (AMF) before derivatives are offered to the public.4

    We recognize that some of the requirements under securities legislation including, as applicable, National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) or the IIROC Dealer Member Rules may need to be tailored. Summaries of existing regulatory requirements applicable to dealers are included at Appendix C of CP 21-402.5 In the Summary of Comments and Responses to CP 21-402, at Appendix C of this Notice, we have indicated some of the areas where we think that flexibility in the application of existing regulatory requirements may be provided. We encourage Dealer Platforms to reach out to us to discuss their business models, the appropriate registration category and how requirements may be tailored. The CSA and, as applicable, IIROC may, on application, consider discretionary exemptions from existing applicable rules where the Dealer Platform demonstrates that it can comply with the policy intent of the existing regulatory requirements in alternative ways.

    Existing registered firms introducing crypto asset products and/or services are required to report changes in their business activities to their principal regulator and, in the case of investment dealers, to IIROC. The proposed changes to activities may be subject to review to assess, among other requirements, whether there is adequate investor protection. If a Dealer Platform starts conducting marketplace activities that would cause it to be considered a Marketplace Platform, the regulatory framework applicable to Marketplace Platforms will also apply.
  2. Interim approach for Dealer Platforms trading Crypto Contracts

    As noted above, to foster innovation and provide flexibility, the CSA has considered an interim approach that would facilitate the development and growth of Dealer Platforms trading Crypto Contracts, while ensuring that they operate within an appropriately regulated environment. We acknowledge that in some cases the time it takes to prepare for and obtain registration as an investment dealer and IIROC membership may delay operations or impact the development of such Dealer Platform’s business in this nascent industry. Further, we understand that some CTPs are interested in a testing environment to assess the technical merits of their proposed platform. Accordingly, we contemplate that, as an interim measure, a Dealer Platform that trades Crypto Contracts may operate by seeking registration as a restricted dealer, provided it does not offer leverage or margin trading. The interim approach will be time limited and the Dealer Platform must take steps during the interim period to transition to a long-term regulatory framework.

    We contemplate that under this interim approach Dealer Platforms that trade Crypto Contracts will be subject to terms and conditions that will be tailored to their business model, as appropriate, and that will address key risks to clients. This approach may also involve certain limitations on the Dealer Platform’s activities which will be determined by the specific facts and circumstances of the Dealer Platform.

    Dealer Platforms operating in New Brunswick, Nova Scotia, Ontario and Québec that trade Crypto Contracts are expected to submit applications for investment dealer registration and IIROC membership during the interim period. We expect that these Dealer Platforms will use the interim period to work actively and diligently to transition to investment dealer registration and obtain IIROC membership by the end of the interim period, which is generally expected to be two years.

    In Québec, as noted above, Dealer Platforms in the business of trading Crypto Contracts that are derivatives will be required to seek registration as a derivatives dealer. Québec derivatives dealers are required to be IIROC members but, for the interim approach, Dealer Platforms may seek a time-limited exemption from this requirement. They will be subject to terms and conditions substantially similar to those imposed on Dealer Platforms registering in the restricted dealer category.6

    Dealer Platforms seeking to continue to operate in Québec will also be expected to use the interim period to work actively and diligently to obtain IIROC membership by the end of the interim period, which is also generally expected to be two years.

    The securities regulators in Alberta, British Columbia, Manitoba and Saskatchewan will consider other regulatory approaches during the interim period, as warranted.  Dealer Platforms operating in these jurisdictions are expected to start the process for investment dealer registration and IIROC membership during the interim period or take other steps during the interim period, in consultation with their principal regulator, to transition to an acceptable long-term regulatory framework.  The interim period is generally expected to be two years.
  3. Application Process

    A Dealer Platform that only facilitates distributions or trading of Security Tokens in reliance on prospectus exemptions and does not offer margin or leverage, should submit an application for registration as an exempt market dealer or as an investment dealer.7 Registration in these categories is contemplated under the passport system described in Multilateral Instrument 11-102 Passport System.  

    As noted above, a Dealer Platform that will trade Crypto Contracts may be registered on an interim basis in the category of restricted dealer, with certain limitations on activities as noted above.

    In Québec, a Dealer Platform that trades Crypto Contracts that are derivatives should submit to the AMF, at the same time and in addition to the registration application as a derivatives dealer, an application for a time-limited exemption from the requirement to obtain IIROC membership and other obligations of derivatives dealers that may not be relevant. In addition, the Dealer Platform will be required to submit a qualification application under the QDA.

    Neither the restricted dealer nor the derivatives dealer category is contemplated under the passport system, but the application and the review will be coordinated among the jurisdictions where a registration application is submitted, with a view to harmonize the terms and conditions in the CSA jurisdictions to the greatest extent possible.

    Additionally, a Dealer Platform that trades Crypto Contracts,
  • may need discretionary exemptive relief in the applicable jurisdictions from the prospectus requirement to facilitate the distribution of Crypto Contracts since it will be subject to the prospectus requirement in most CSA jurisdictions, and
  • may need discretionary relief from the over-the-counter trade reporting requirements in the applicable CSA jurisdictions,8 on the basis that it provides alternative reporting, if it is unable to comply with existing requirements.

    Any applications for discretionary exemptive relief from regulatory requirements, including submissions regarding why that relief is appropriate, should accompany the registration application and include how key risks, including to investors and the integrity of the capital markets, are addressed.

Marketplace Platforms

A CTP is a Marketplace Platform if it:

  • constitutes, maintains or provides a market or facility for bringing together multiple buyers and sellers or parties to trade in Security Tokens and/or Crypto Contracts;
  • brings together orders of Security Tokens and/or Crypto Contracts of multiple buyers and sellers or parties of the contracts; and
  • uses established, non-discretionary methods under which orders for Security Tokens and/or Crypto Contracts interact with each other and the buyers and sellers or parties entering the orders agree to the terms of a trade.

Some commenters have suggested that there is no centralized marketplace involved when a digital ledger (such as blockchain) is used to record “trades” agreed to between the parties.  However, in many circumstances the individual trades on the CTP are not recorded on the digital ledger. Rather, the digital ledger is only used to record transactions where the customer delivers crypto assets to the CTP or takes delivery of crypto assets from the CTP. In our view, if the orders of multiple buyers and sellers or parties are brought together on a third-party facility, and the interaction of those orders results in a trade, that facility acts as a marketplace.

A Marketplace Platform may also perform traditional dealer functions, including holding assets and other functions like those mentioned in the preceding section on Dealer Platforms.

In any case, Marketplace Platforms are in the business of trading in securities and/or derivatives and, unless they are regulated as an exchange (as described below), should seek registration as described below.

  1. Regulatory Requirements for Marketplace Platforms

    Similar to the manner in which alternative trading systems (ATS)9 are regulated today, a Marketplace Platform will operate under the oversight of the CSA and a self-regulatory entity, as defined in NI 21-101.10 Currently, the only self-regulatory entity that fits this definition is IIROC.

    As a starting point, the concepts described in the provisions applicable to marketplaces outlined in NI 21-101, National Instrument 23-101 Trading Rules (NI 23-101) and National Instrument 23-103 Electronic Trading and Direct Electronic Access to Marketplaces (NI 23-103) are generally relevant to Marketplace Platforms and such provisions, or provisions comparable to those in NI 21-101, NI 23-101 and NI 23-103 will be applied to Marketplace Platforms.11 In addition, we contemplate that the trading activity on a Marketplace Platform will be subject to market integrity requirements such as those in IIROC’s Universal Market Integrity Rules (UMIR), or provisions consistent with those in the UMIR. However, we anticipate that tailoring of such requirements may be appropriate to accommodate the novel aspects of CTPs. At Appendix B, we have outlined certain core market integrity requirements that we anticipate would be relevant to trading on Marketplace Platforms.
  2. Regulatory Requirements for Marketplace Platforms that also Conduct Dealer Activities

    As noted above, some Marketplace Platforms also conduct activities similar to those performed by Dealer Platforms, such as granting direct access to investors (retail and institutional), trading as a counterparty to their clients or providing custody of assets. Where a Marketplace Platform performs these functions, it would also be subject to the appropriate dealer requirements discussed above. Furthermore, depending on the circumstances and the CTP’s business model, such dealer activities may have to be conducted through a separate entity or business unit which would need to meet the applicable regulatory requirements or separated through ethical walls.

    For reference, summaries of the key regulatory requirements applicable to marketplaces and dealers are included at Appendices B and C of CP 21-402, respectively.12 We note, however, that there will be flexibility regarding how the requirements will apply. Some of the above requirements will not be relevant or may necessitate customization or tailoring as a result of the functions being performed, or the operational model of, the Marketplace Platform.  As is currently the case for most ATSs, certain requirements in NI 31-103 and many of the IIROC Dealer Member Rules may not apply to a Marketplace Platform that operates as a trading venue only and does not perform any dealer activities (for example, no custody or retail client on-boarding).  In the context of Marketplace Platforms that also have dealer functions, IIROC and/or the CSA may, on application by a CTP, consider discretionary exemptions from existing applicable rules where the Marketplace Platform demonstrates that it can comply with the policy intent of the existing regulatory requirements in alternative ways, or where its operational model is such that compliance with the specific requirement is impractical, but the risks, described in Appendix A of this Notice, can be appropriately managed in another way.

    In the Summary of Comments and Responses to CP 21-402 at Appendix C, we have indicated some of the areas where we think that flexibility in the application of existing regulatory requirements may be provided. In Appendix B we have also outlined the IIROC requirements that are expected to apply and where there may be flexibility in the application of IIROC Dealer Member Rules or the UMIR.
  3. Marketplace Platform as an Exchange

    In some cases, it may be appropriate to regulate a Marketplace Platform as an exchange. For example, if a Marketplace Platform trades Security Tokens and regulates issuers of those securities, or if it regulates and disciplines its trading participants other than by merely denying them access to the platform,13 the Marketplace Platform may be carrying on business as an exchange and would be expected to seek recognition or, if appropriate, an exemption from recognition as an exchange. In these cases, the Marketplace Platform will be expected to oversee its issuers’ continuing compliance with the listing requirements of the Marketplace Platform and regulate the operations and standards of practice and business conduct of its members and their representatives, directly or indirectly.14 The Marketplace Platform will be subject to a public interest mandate because it exercises regulatory functions and it will have to have rules requiring compliance with securities legislation and provide appropriate sanctions of violations of such rules.
  4. Interim Approach for Marketplace Platforms

    We acknowledge that, in some cases, a Marketplace Platform may wish to conduct a pilot to, for example, test a novel business idea or a proposed new market, or the time it takes to prepare for obtain registration and IIROC membership may delay operations or impact the development of a Marketplace Platform’s business. In these circumstances, provided that the Marketplace Platform is not offering leverage or margin and are not exchanges, it could seek registration as an exempt market dealer or restricted dealer, as appropriate, for a limited period of time. If Marketplace Platforms perform exchange functions, we would consider whether recognition as an exchange or an exemption is needed in the interim.

    Marketplace Platforms operating in New Brunswick, Nova Scotia, Ontario and Québec are expected to start the process for registration as an investment dealer and IIROC membership, or the process for recognition or exemption from recognition as an exchange, as applicable, during the interim period, which is generally expected to be two years.

    The securities regulators in Alberta, British Columbia, Manitoba and Saskatchewan will consider other regulatory approaches during the interim period, as warranted.  Marketplace Platforms operating in these jurisdictions are expected to start the process for investment dealer registration and IIROC membership, or the process for recognition or exemption from recognition as an exchange, during the interim period or take other steps during the interim period, in consultation with their principal regulator, to transition to an acceptable long-term regulatory framework.  The interim period is generally expected to be two years.
  5. Application Process

    We would generally expect that a Marketplace Platform that is not an exchange would apply for registration as an investment dealer and seek IIROC membership, unless it is pursuing the interim approach described above. The Marketplace Platform should include with its application information similar to that currently included in Form 21-101F2 Information Statement Alternative Trading System.15 The process for IIROC membership is described on IIROC’s website.16 A Marketplace Platform that is an exchange would apply for recognition as an exchange. It would submit an application describing how it meets certain criteria for recognition
    17 and the information currently included in Form 21-101F1 Information Statement Exchange or Quotation and Trade Reporting System.18 A Marketplace Platform that wishes to pursue the interim approach described above would make application to applicable securities regulatory authorities for registration as an exempt market dealer or restricted dealer, as described in paragraph iv. above. 

    As indicated above, ensuring market integrity is critical for the management of the risks associated with trading on a Marketplace Platform. As a result, a Marketplace Platform that seeks to use the interim approach and register as a restricted dealer or exempt market dealer for a limited period of time must satisfy the regulator that it appropriately manages the risks relating to trading. Key to this is the existence of rules and processes to monitor trading and the availability of resources, including staff who understand trading activities and can monitor trading on the Marketplace Platform.  Marketplace Platforms seeking to employ surveillance solutions during this interim period would need to ensure they have the requisite capabilities to do so, having regard to the marketplace they will operate and the restrictions or limitations that will be applied during the interim period.

    During the period of interim registration, we anticipate imposing appropriate limitations on the types of activities undertaken by Marketplace Platforms in order to mitigate the risks, which will depend on the Marketplace Platform’s operational model and the risks it presents. Such constraints could include: limits on the number and types of products traded, the types or number of participants, or on the amount invested by any particular participant.

    Relevant to the determination of appropriate limitations could be:
  • whether the Marketplace Platform provides any advice to participants,
  • whether the Marketplace Platform trades on a proprietary basis, and
  • whether there is any differentiation between client types (e.g., the sophistication and experience of the participant). 

    Any applications for discretionary exemptive relief from regulatory requirements, including submissions regarding why that relief is appropriate, should accompany the registration application or, in the case of Marketplace Platforms that are exchanges, the application for recognition or exemption from recognition as an exchange. Similar to Dealer Platforms, Marketplace Platforms that trade Crypto Contracts may also need exemptive relief from the prospectus requirement to facilitate the distribution of Crypto Contracts and from the over-the-counter trade reporting requirements.

Additional Considerations in the Context of Clearing and Settlement

A CTP may also perform clearing functions and may be a clearing agency or a clearing house under securities legislation. In some CSA jurisdictions:

  • a registered dealer or recognized exchange is exempt from clearing agency recognition as dealers and exchanges are excluded from the definition of clearing agency
  • the CTP is exempt from clearing agency recognition if the clearing functions are only an incidental component of its principal business, or
  • the CTP may require recognition or need to seek an exemption from recognition as a clearing agency or a clearing house.

    In order to provide flexibility in these cases, we will look at the specific risks presented by the clearing functions in order to determine whether a CTP will be required to be recognized as a clearing agency or exempted from the requirement to be recognized and what terms and conditions should apply. Certain requirements that are applicable to clearing agencies set out in National Instrument 24-102 Clearing Agency Requirements, such as policies, procedures and controls to address comprehensive management of risks including systemic risk, legal risk, credit risk, liquidity risk, general business risk, custody and investment risk and operational risk, may be appropriate to apply to a CTP to mitigate the risks associated with the clearing functions it performs.  We anticipate imposing terms and conditions on the CTP’s registration or its recognition or exemption order to address these risks. CTPs that offer clearing services should discuss these functions with the appropriate securities regulatory authority so that the appropriate approach is determined.

    For Marketplace Platforms, we also note that existing requirements applicable to marketplaces in NI 21-101 require all trades executed on a marketplace to be reported and settled through a regulated clearing agency. Currently, there are no clearing agencies recognized in Canada for transactions in Security Tokens and Crypto Contracts. As a result, in some jurisdictions, Marketplace Platforms will need to apply for an exemption from the requirement in NI 21-101 and explain how the risks are otherwise addressed.

IIROC Membership Process for Entities with Novel Business Models

As noted above, we expect it would be appropriate that some CTPs become IIROC members. IIROC recognizes the need to be flexible and foster innovation and has therefore established a path to membership for businesses or entities with novel business models, including Marketplace or Dealer Platforms that do not necessarily fit in the existing IIROC membership structure.

The process for reviewing a membership application from an entity with a novel business model would differ from the existing IIROC processes in that IIROC would review the new elements of a Marketplace or Dealer Platform’s business model and determine:

  • how best to apply current requirements; and
  • whether any exemptions from IIROC requirements and/or time-limited terms and conditions are appropriate.

IIROC expects that entities with novel business models would be granted membership with time-limited terms and conditions and exemptions that take into account the new aspects of the entity’s operations.19 This is in contrast with its approach to current Dealer Members, through which IIROC generally imposes all its applicable requirements without additional exceptions or terms and conditions on their membership.

IIROC will apply this application review process for novel business models to a Marketplace or Dealer Platform that demonstrates:

  • a new business model which presents unique features not consistent with current IIROC membership categories;
  • that it has a business plan or road map; and
  • potential investor benefits.

As part of the application review process for novel business models, IIROC will:

  • assess the applicable requirements for the Marketplace or Dealer Platform by reviewing their underlying policy objectives and determine whether the applicable requirements need to be modified in the context of a CTP’s new business model;
  • collaborate with the Marketplace or Dealer Platform to ensure it develops appropriate policies and procedures to comply with applicable IIROC requirements;
  • place limits on the activity, products and/or number of clients, as appropriate; and
  • conduct surveillance of trading activities as appropriate.

The review of these novel businesses will be conducted in partnership with the CSA, to ensure consistency of approach, coordination and agreement with respect to novel approaches to manage risks.

It is important that we continue to foster innovation but also promote investor protection and support fair and efficient markets. As CTPs and the environment within which they operate continue to evolve, we will continue to monitor this space and assess whether the approach described in this Notice for regulating CTPs remains appropriate and evolves with the industry.

Part 4 – Complying with Securities Legislation

We encourage CTPs to consult with their legal counsel and to contact staff of their local securities regulatory authority on the appropriate steps to comply with securities legislation and IIROC rules.

As the technology and operational models of CTPs continue to evolve, the CSA and IIROC welcome continued dialogue with CTPs and stakeholders on issues that are developing and possible ways of complying with requirements and additional areas where flexibility may be appropriate.

We remind CTPs operating from outside Canada that have Canadian clients that they are expected to comply with Canadian securities legislation.  CSA members may take new enforcement actions or continue existing actions against CTPs that do not and/or have not complied with Canadian securities legislation.

Part 5 – Questions

Please refer your questions to any of the following CSA and IIROC staff:

Amanda Ramkissoon
Senior Regulatory Adviser, OSC LaunchPad
Ontario Securities Commission
[email protected]

Ruxandra Smith
Senior Accountant, Market Regulation
Ontario Securities Commission
[email protected]

Gloria Tsang
Senior Legal Counsel, Compliance and Registrant Regulation
Ontario Securities Commission
[email protected]

Timothy Baikie
Senior Legal Counsel, Market Regulation
Ontario Securities Commission
[email protected]

Lise Estelle Brault
Senior Director, Data Value Creation, Fintech and Innovation
Autorité des marchés financiers
[email protected]

Serge Boisvert
Senior Policy Advisor
Autorité des marchés financiers [email protected]

Nataly Carrillo
Senior Policy Advisor
Autorité des marchés financiers
[email protected]

Sophie Jean
Executive Advisor, Supervision of Intermediaries
Autorité des marchés financiers
[email protected]

Denise Weeres
Director, New Economy
Alberta Securities Commission
[email protected]

Katrina Prokopy
Senior Legal Counsel, Market Regulation
Alberta Securities Commission
[email protected]

Cathy Tearoe
Senior Legal & Policy Counsel
New Economy
Alberta Securities Commission
[email protected]

Dean Murrison
Executive Director, Securities Division
Financial and Consumer Affairs Authority of Saskatchewan
[email protected]

Michael Brady
Manager, Derivatives
British Columbia Securities Commission
[email protected]

Rina Jaswal
Senior Legal Counsel, Capital Markets Regulation
British Columbia Securities Commission
[email protected]

Peter Lamey
Legal Analyst, Corporate Finance Nova Scotia Securities Commission
[email protected]

Chris Besko
Director, General Counsel
The Manitoba Securities Commission [email protected]

David Shore
Legal Counsel, Securities Division
Financial and Consumer Services Commission (New Brunswick)
[email protected]

Sonali GuptaBhaya
Director, Market Regulation Policy
IIROC
[email protected]

Victoria Pinnington
Senior Vice President, Market Regulation IIROC
[email protected]

 

 

  • 1. As defined in National Instrument 14-101 Definitions and includes legislation related to both securities and derivatives.
  • 2. A marketplace is defined in National Instrument 21-101 Marketplace Operation (NI 21-101). A marketplace is an entity that brings together the orders of multiple buyers and sellers of securities, and in some jurisdictions, parties to certain types of derivatives, using established, non-discretionary methods through which buyers and sellers agree to the terms of a trade.
  • 3. For example, certain dealers are in the business of trading contracts for difference and similar “over-the-counter” derivative products that are currently treated as both securities and derivatives for the purposes of securities legislation in certain jurisdictions, and therefore compliance with the registration and prospectus requirements is required (in certain jurisdictions, contracts for difference and other “over-the-counter” derivative products are exclusively derivatives and therefore compliance with registration and other applicable provisions is required).  Another example relates to certain foreign marketplaces operating facilities or markets that trade derivatives (e.g., swap execution facilities) that currently operate their business locally under an exemption from the requirement to register as an exchange. Depending on the functions or operations of the platform that is in the business of trading derivatives, the platform may be operating as a dealer, a marketplace, a clearing agency or a combination of these categories, and therefore, registration or recognition requirements will apply.
  • 4. The marketing of each derivative must also be authorized by the AMF, and such Dealer Platforms can offer derivatives to the public only as a registered derivatives dealer, or through a registered derivatives dealer.
     
  • 5. Please note that Appendix C of CP 21-402 is not intended to be an exhaustive list of applicable requirements.
  • 6. The AMF may consider, under special circumstances, granting a discretionary time-limited exemption from the qualification requirement as a transition to allow the filing of a qualification application within a certain timeframe.
     
  • 7. A Dealer Platform trading Security Tokens may be required to operate with terms and conditions on registration that appropriately address the specific risks applicable to its business model. See Appendix A for a description of risks.
  • 8. See Ontario Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting; Manitoba Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting; Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting; Québec Regulation 91-507 respecting Trade Repositories and Derivatives Data Reporting.
  • 9. As defined in NI 21-101 and, in Ontario, in the Securities Act (Ontario).
  • 10. A self-regulatory entity is defined in NI 21-101 as a self-regulatory body or self-regulatory organization that (i) is not an exchange, and (b) is recognized as a self-regulatory body or self-regulatory organization by the securities regulatory authority.
  • 11. Certain jurisdictions intend to apply requirements that are comparable to the referenced marketplace rules and oversight structures as applicable in the circumstances to Marketplace Platforms trading over-the-counter derivatives because these rules do not extend to over-the-counter derivatives in these jurisdictions.
  • 12. Available here
  • 13. “Discipline” involves more than just denying access, it may entail fines and reprimands and requires a disciplinary framework that offers the participant due process.
  • 14. An exchange may retain a regulation services provider to provide these functions. See section 7.1(2) of NI 23-101 To date, all of the equity exchanges have retained IIROC as their regulation services provider.
     
  • 15. Available here
  • 16. Click here.
     
  • 17. The criteria and the process for becoming a recognized exchange are available here.
  • 18. Available here.
  • 19. IIROC will work with the CSA to determine whether any of the terms and conditions imposed by the CSA will continue to apply in the form granted by the CSA or in a modified form.