The Canadian Securities Administrators (CSA) have published CSA Staff Notice 21-328
Regulatory Approach to Foreign Marketplaces Trading Fixed Income Securities(the Staff Notice).
The Staff Notice discusses the framework developed by the CSA that will grant exemptions to foreign alternative trading systems trading fixed income securities (foreign ATSs) that request to carry on business in Canada. In the same Staff Notice, the regulator also advises that foreign multilateral trading facilities (foreign MTFs) may be permitted to trade fixed income securities.
Under the exemption model, foreign ATSs may be permitted to offer direct access to Canadian participants without having to establish a Canadian-based affiliate, provided they meet certain terms and conditions, including a requirement that they comply with the applicable regulation in their home jurisdiction. To offer direct access to Canadian participants, a foreign ATS would need to apply for an exemption from the Marketplace Rules.
Regarding the situation where a foreign MTF seeking to offer direct trading in fixed income securities to Canadian participants, the MTF may apply to expand its existing exchange exemption order to allow for trading of fixed income securities. Additional terms and conditions may be appropriate to facilitate this trading.
Although the proposed exemption would grant foreign ATSs relief from the Marketplace Rules, depending on their model of operations, the regulator advises that foreign ATSs or their participants may still be subject to registration under applicable securities legislation. Foreign ATSs may trigger registration requirements under applicable Canadian securities laws because they may engage in the business of trading.
CSA Staff Notice 21-328 Regulatory Approach to Foreign Marketplaces Trading Fixed Income Securities is available for download from the websites of the Participating Jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.