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Volume 50, No. 5

B.C. Reg. 48/2007

The British Columbia Gazette,

Part II

February 27, 2007

B.C. Reg. 48/2007, deposited March 1, 2007, pursuant to the SECURITIES ACT [Section 184]. Rule of the British Columbia Securities Commission, dated February 26, 2007.

The British Columbia Securities Commission orders that

(

a) National Instrument 21-101 Marketplace Operation, B.C. Reg. 251/2001 is amended as set out in the attached

Schedule A, and

(

b) National Instrument 23-101 Trading Rules, B.C. Reg. 252/2001 is amended as set out in the attached

Schedule B.

— D. HYNDMAN, British Columbia Securities Commission.

Schedule A

1 This Instrument amends National Instrument 21-101 Marketplace Operation, B.C. Reg. 251/2001.

Section 1.1 is amended by repealing the definition of "government debt security" and substituting the following definition:

"government debt security" means

(

b) a debt security issued or guaranteed by any municipal corporation in Canada, or secured by or payable out of rates or taxes levied under the law of a jurisdiction of Canada on property in the jurisdiction and to be collected by or through the municipality in which the property is situated,

(

c) a debt security of a crown corporation,

(

d) in Ontario, a debt security of any school board in Ontario or of a corporation established under

section 248 (1) of the Education Act (Ontario), or

(

e) in Québec, a debt security of the Comité de gestion de la taxe scolaire de l'île de Montréal

that is not listed on a recognized exchange or quoted on a recognized quotation and trade reporting system or listed on an exchange or quoted on a quotation and trade reporting system that has been recognized for the purposes of this Instrument and NI 23-101.

Section 6.2 is repealed and the following substituted:

6.2 Registration Exemption Not Available — Except as provided in this Instrument, the registration exemptions applicable to dealers under securities legislation are not available to an ATS.

Part 7 is amended

(

a) in

section 7.2 by striking out "orders" and

substituting "trades";

(

b) in

section 7.4 by striking out "orders" and

substituting "trades";

(

c) by repealing

section 7.5 and substituting the following:

7.5 Consolidated Feed — Exchange-Traded Securities — An information processor shall produce an accurate and timely consolidated feed showing the information provided to the information processor under sections 7.1 and 7.2.

7.6 Compliance with Requirements of an Information Processor — A marketplace shall comply with the reasonable requirements of the information processor to which it is required to provide information under this Part.

Part 8 is amended by

(

a) repealing subsection 8.2 (1) and substituting the following:

A marketplace that displays orders of corporate debt securities to a person or company shall provide accurate and timely information regarding orders for designated corporate debt securities displayed on the marketplace to an information processor, as required by the information processor, or if there is no information processor, to an information vendor that meets the standards set by a regulation services provider, as required by the regulation services provider. ,

(

b) repealing subsection 8.2 (3) and substituting the following:

A marketplace shall provide accurate and timely information regarding details of trades of designated corporate debt securities executed on the marketplace to an information processor, as required by the information processor, or if there is no information processor, to an information vendor that meets the standards set by a regulation services provider, as required by the regulation services provider.

(

c) repealing subsection 8.2 (4) and substituting the following:

An inter-dealer bond broker shall provide accurate and timely information regarding details of trades of designated corporate debt securities executed through the inter-dealer bond broker to an information processor, as required by the information processor, or if there is no information processor, to an information vendor that meets the standards set by a regulation services provider, as required by the regulation services provider.

(

d) repealing subsection 8.2 (5) and substituting the following:

A dealer executing trades of corporate debt securities outside of a marketplace shall provide accurate and timely information regarding details of trades of designated corporate debt securities traded by or through the dealer to an information processor, as required by the information processor, or if there is no information processor, to an information vendor that meets the standards set by a regulation services provider, as required by the regulation services provider.

(

e) repealing

section 8.5 and substituting the following:

8.5 Reporting requirements for the information processor

(1) The information processor shall report, within 30 days after the end of each calendar quarter, the process and criteria for selection of government debt securities, as applicable, and designated corporate debt securities and the list of government debt securities, as applicable, and designated corporate debt securities.

(2) The information processor shall report, within 30 days after the end of each calendar year, the process to communicate the designated securities to the marketplaces, inter-dealer bond brokers and dealers providing the information as required by the Instrument, including where the list of designated securities can be found.

, and

(

f) adding the following section:

8.6 Exemption for Government Debt Securities —

Section 8.1 does not apply until January 1, 2012.

Part 11 is amended by repealing

section 11.2 (2) and substituting the following:

(2) A marketplace shall transmit to a securities regulatory authority or a regulation services provider, if it has entered into an agreement with a regulation services provider in accordance with NI 23-101, the information required by the securities regulatory authority or the regulation services provider, within ten business days, in electronic form as required by the securities regulatory authority or regulation services provider.

(3) The record kept by a marketplace under

section 11.1 and subsection 11.2 (1) and the transmission of information to a securities regulatory authority or a regulation services provider under subsection 11.2 (2) shall be in electronic form as prescribed by a securities regulatory authority or a regulation services provider.

Part 12 is amended by adding the following section:

12.3 Availability of technology specifications and testing facilities

(1) For at least two months immediately prior to operating, a marketplace shall make available to the public any technology requirements regarding interfacing with or access to the marketplace.

(2) After the technology requirements set out in subsection (1) have been published, a marketplace shall make available to the public, for at least one month, testing facilities for interfacing with and access to the marketplace.

8 Appendix A is repealed.

9 Exhibit G of Form 21-101F2 Initial Operation Report - Alternative Trading System is amended by adding the following at the end of item 5:

Where applicable, the description should include, at a minimum: the parties involved in settling the trades; the trades being settled; and the procedures to manage counterparty and settlement risk.

10 Form 21-101F5 Initial Operation Report for Information Processor is amended under the heading Corporate Governance,

(

a) in the description of Exhibit A, by adding "identifying

the processes and procedures which promote independence from the marketplaces,

inter-dealer bond brokers and dealers that provide data" after "all

subsequent amendments",

(

b) in the description of Exhibit C, by adding "identifying

those individuals with overall responsibility for the integrity and timeliness

of data reported to and displayed by the system (the "System") of the

information processor," after "the previous year", and

(

c) at the end of the first sentence of the description of Exhibit E,

by adding "identifying the employees responsible for monitoring the

timeliness and integrity of data reported to and displayed by the System".

Part 2 Systems and Operations of Form 21-101F5 Initial Operation Report for Information Processor is amended

(

a) in the description of Exhibit G by striking out "the

system (the "System") of the information processor" and substituting "the

System",

(

b) at the end of subsection 2 of the description of Exhibit G by

adding "including data validation processes",

(

c) by repealing the description of Exhibit H and substituting the following:

A description in narrative form of each service or function performed by the information processor. Include a description of all procedures utilized for the collection, processing, distribution, validation and publication of information with respect to orders and trades in securities.

, and

(

d) by striking out the last sentence of the description of Exhibit J and substituting the following:

Describe any measures used to verify the timeliness and accuracy of information received and disseminated by the System, including the processes to resolve data integrity issues identified.

12 Form 21-101F5 Initial Operation Report for Information Processor is

amended in the title to

Part 4 by striking out "Fees" and

substituting "Fees and Revenue Sharing".

13 Form 21-101F5 Initial Operation Report for Information Processor is amended by adding the following at the end of the description of Exhibit O:

Where arrangements to share revenue from the sale of data disseminated by the information processor with marketplaces, inter-dealer bond brokers and dealers that provide data to the information processor in accordance with National Instrument 21-101 are in place, a complete description of the arrangements and the basis for these arrangements.

14 Form 21-101F5 Initial Operation Report for Information Processor is amended by adding the following after Item 5:

6. SELECTION OF SECURITIES REPORTED TO THE INFORMATION PROCESSOR

Exhibit T

Where the information processor is responsible for making a determination of the data which must be reported, including the securities for which information must be reported in accordance with National Instrument 21-101, describe the manner of selection and communication of these securities. This description should include the following:

1. The criteria used to determine which securities should be reported to the information processor.

2. The process for selection of the securities, including a description of the parties consulted in the process and the frequency of the selection process.

3. The process to communicate the securities selected to the marketplaces, inter-dealer bond brokers and dealers providing the information as required by National Instrument 21-101. The description should include where this information is located.

Schedule B

1 This Instrument amends National Instrument 23-101 Trading Rules, B.C. Reg. 252/2001.

Part 3 is amended by repealing subsection 3.1 (2) and substituting the following:

(2) In Alberta, British Columbia, Ontario, Québec and Saskatchewan, instead of subsection (1), the provisions of the

Securities Act (Alberta), the Securities Act (British Columbia), the

Securities Act (Ontario), the Securities Act (Québec) and

The Securities Act, 1988 (Saskatchewan), respectively, relating to manipulation and fraud apply.

Part 7 is amended

(

a) in subsection 7.2 (

a) by striking out "recognized exchange

and its members" and substituting "members of a recognized

exchange", and

(

b) in subsection 7.4 (

a) by striking out "recognized

quotation and trade reporting system and its users" and substituting "users

of a recognized quotation and trade reporting system".

Part 11 is amended

(

a) in

section 11.1 by renumbering it "11.1 (1)" and by

adding the following subsection:

(2) A dealer or inter-dealer bond broker is exempt from this

Part if the dealer or inter-dealer bond broker complies with similar requirements, for any securities specified, established by a regulation services provider and approved by the applicable securities regulatory authority.

(

b) in subsection 11.2 (1) by striking out "Immediately

following the receipt or origination of an order for securities" and

substituting "Immediately following the receipt or origination of an

order for equity, fixed income and other securities identified by a regulation

services provider",

(

c) in paragraph 11.2 (1) (

q) by striking out the word "and",

(

d) in paragraph 11.2 (1) (

r) by striking out "an insider

marker" and substituting "an insider marker; and",

(

e) in subsection 11.2 (1) by adding the following paragraph:

(

s) any other markers required by a regulation services provider.

(

f) by repealing subsection 11.2 (5) and substituting the following:

(5) Transmittal of Order Information — A dealer and inter-dealer bond broker shall record and shall transmit within 10 business days to a securities regulatory authority or a regulation services provider the information required by the securities regulatory authority or the regulation services provider, in electronic form, as required by the securities regulatory authority or the regulation services provider. ,

(

g) repealing subsection 11.2 (6) and substituting the following:

(6) Electronic Form — The record kept by the dealer and inter-dealer bond broker under subsections (1) through (4) and the transmission of information to a securities regulatory authority or a regulation services provider under subsection (5) shall be in electronic form by January 1, 2010.

, and

(

h) in

section 11.2 by adding the following subsection:

(7) Record preservation requirements — A dealer and an inter-dealer bond broker shall keep all records for a period of not less than seven years from the creation of the record referred to in this section, and for the first two years in a readily accessible location.

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