On December 8, 2010 the Government of Ontario’s new Bill, Helping Ontario Families and Managing Responsibility Act, 2010, received royal assent, ushering in new rules and regulations relating to derivatives1 within the Province of Ontario. The new bill amends specific provisions of the Securities Act (Ontario), and although certain provisions have yet to become enforceable, once fully implemented the amendments to the Securities Act (Ontario) will allow for the following:
- specific requirements for trading in derivatives, including a broad requirement to file disclosure documents, unless otherwise exempt;
- people trading in derivatives will be required to be registered as dealers with the Ontario Securities Commission, unless otherwise exempt;
- dealers will be subject to market conduct requirements, including the requirement to provide trade confirmations, prohibition regarding telephoning a residence, trade information must be provided to the Ontario Securities Commission, and the Ontario Securities Commission may require approval of certain advertising materials and disclosure documents; and
- provisions related to insider trading and tipping (including possible civil liability), misrepresentations in disclosure documents, fraud and market manipulation are extended to derivative transactions.
In addition to the foregoing, the amendments to the Securities Act (Ontario) provide the Ontario Securities Commission with the following powers:
- supervisory powers over exchanges on which derivatives are to be traded;
- authority to decide who can become a trade repository (collect reports on derivatives trading activities), as well as the powers to regulate such entities; and
- investigative and enforcement powers have been extended to include derivatives, allowing for financial examinations and conduct compliance reviews, as well as the ability to issue sanctions.