The Ontario Securities Commission has recently issued a decision which defines when it will review decisions made by a self-regulatory organization (In The Matter of TSX Inc., Market Regulation Services Inc., Northern Securities Inc., Vic Alboini and Christopher Shule, 23 October 2007).

The decision arose out of a request for hearing and review brought by respondents in a Market Regulation Services Inc. (“RS”) disciplinary proceeding. Procedural issues had arisen, including as to whether the TSX had followed the applicable protocol in adopting certain rules. The respondents in the RS proceeding took the position that the protocol had not been followed. The RS panel which heard that issue declined to give a ruling, directing that the respondents instead seek a ruling from the Ontario Securities Commission. Subsequently, staff for RS conceded that the disputed rules would not apply to the respondents. However, the respondents continued with their request for hearing and review to the Ontario Securities Commission.

The Commission ruled that not every decision made by a self-regulatory organization is subject to review. The Commission further ruled that the decision in question was not a decision which directly affects the parties and that the statutory hearing and review procedure was not available. However, the Commission also confirmed that it has an overriding supervisory jurisdiction which allowed the Commission to exercise oversight powers.

The Commission went on to determine that the RS panel had the jurisdiction to resolve the relevant issues, including as to its own jurisdiction. The Commission held that having the RS hearing panel hear the matter would reduce the risk of fragmented proceedings and would allow any eventual review, if needed, to proceed on a complete record. The Commission concluded that although it had the jurisdiction to intervene, it should not do so at this time. In reaching that conclusion, the Commission held that selfregulatory organizations and their specialized role in the regulation of capital markets should be recognized and supported.