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Volume 63, No. 4

45/2020

The British Columbia Gazette,

Part II

March 10, 2020

B.C. Reg. 45/2020 , deposited March 2, 2020, under the SECURITIES ACT [section 183], the SECURITIES AMENDMENT ACT, 2006 [section 71] and the SECURITIES AMENDMENT ACT, 2019 [section 101]. Order in Council 101/2020, approved and ordered March 2, 2020.

On the recommendation of the undersigned, the Lieutenant Governor, by and with

the advice and consent of the Executive Council, orders that, effective March 27, 2020,

(

a) the Securities Amendment Act, 2019 , S.B.C. 2019, c. 38, is brought into force, except the following:

(

i) section 1 (h);

(ii)

section 19 (b);

(iii)

section 21;

(iv)

section 78 insofar as it enacts sections 163.2 and 163.3 of the Securities Act , R.S.B.C. 1996, c. 418,

(

b) section 47 (

f) of the Securities Amendment Act, 2006 , S.B.C. 2006, c. 32, is brought into force insofar as it amends

section 155 (1) (

b) of the Securities Act , R.S.B.C. 1996, c. 418, by striking out "121, 122, 124",

(

c) Multilateral Instrument 91-101 Derivatives: Product Determination , B.C. Reg. 202/2016, is amended as set out in the attached

Schedule A,

(

d) Multilateral Instrument 96-101 Trade Repositories and Derivatives Data Reporting , B.C. Reg. 203/2016, is amended in

section 1 (5) (

a) by striking out "British Columbia,",

(

e) National Instrument 14-101:

Definitions , B.C. Reg. 48/97, is amended as set out in the attached

Schedule B,

(

f) the Securities Regulation, B.C. Reg. 196/97, is amended as set out in the

attached

Schedule C, and

(

g) the Securities Rules, B.C. Reg. 194/97, is amended as set out in the attached

Schedule D.

— C. JAMES, Minister of Finance and Deputy Premier ; J. DARCY, Presiding Member of the Executive Council .

Schedule A

Section 1 of Multilateral Instrument 91-101 Derivatives: Product Determination , B.C. Reg. 202/2016, is amended

(

a) in subsection (4) by striking out " British Columbia, " and in paragraph (b) (ii) and (iv) by striking out " British Columbia and ", and

(

b) in subsection (5) (

a) by adding " British Columbia, " after " Alberta, " and in paragraph (

b) by striking out " British Columbia, ".

Schedule B

Section 1.1 (3) of National Instrument 14-101:

Definitions , B.C. Reg. 48/97, is amended by adding the following definition:

"exchange contract" means, in Alberta, British Columbia, New Brunswick, Nova Scotia and Saskatchewan,

a derivative

(

a) that is traded on an exchange,

(

c) for which a clearing agency substitutes, through novation or otherwise, the

credit of the clearing agency for the credit of the parties to the derivative; .

Schedule C

Section 7.1 of the Securities Regulation, B.C. Reg. 196/97, is amended in paragraph (

a) of the definition of "eligible applicant" by striking out "

section 7.2 " and substituting "

section 15.1 (1) of the Act ".

Section 7.2 is repealed.

Section 7.3 (1) is repealed.

Section 7.6 is amended by striking out "

section 15.1 (5) " and substituting "

section 15.1 (1.1) ".

Section 9 (1) is repealed.

Section 12 is amended by striking out "

section 143 (3) " and substituting "

section 143 (3) or 143.1 (5) ".

Part 5 is repealed.

8 The title of

Part 5.1 is amended by striking out " Self Regulatory Bodies " and substituting " Self-regulatory Bodies ".

Section 13.1 is amended by striking out " self regulatory bodies " and substituting " self-regulatory bodies ".

Schedule D

Section 1 (1) of the Securities Rules, B.C. Reg. 194/97, is amended

(

a) by repealing the

definitions of "forward contract" and "market value" , and

(

b) in the definition of "NI 52-107" by striking out " Acceptable Accounting Principles, Auditing Standards and Reporting

Currency " and substituting " Acceptable Accounting Principles and Auditing Standards ".

Section 23 is amended

(

a) in subsection (1) (

a) by striking out " self regulatory body " and substituting " self-regulatory body " and by striking out "

section 24 (1) or (2) " and substituting "

section 24 (

a) or (b) ", and

(

b) in subsection (2) by striking out " self regulatory body " and substituting " self-regulatory body ".

Section 93 is amended by striking out " 50 (2) " and substituting " 50 (5) (b) ".

Part 18 is amended

(

a) by adding the following before

section 186:

Division 1 – Reactivation , and

(

b) by repealing

section 187.1 and adding the following Division after

section 187:

Division 2 – Principles of Penalty Determination

Prescribed principles

187.1 For the purposes of

section 155 (5) of the Act, the principles set out in this Division

are prescribed.

General principles

187.2 The following general principles apply to the calculation of profit made or loss

avoided for the purposes of

section 155 (5) of the Act:

(

a) that offenders be treated consistently in terms of the determination of profits

made or losses avoided;

(

b) that, in recognition that markets are influenced by many factors, in respect

of the determination of profit made or loss avoided, an offender not receive the benefit

of, and not bear the burden of, market changes unrelated to the offender's misconduct;

(

c) that, in recognition that it may take a period of time for the impact of an

offender's misconduct, or for the information that is the basis for the misconduct,

to be fully reflected in the market valuation of a security or derivative, the determination

of profit made or loss avoided be based on market valuations over the period of time

necessary to reflect the impact of the misconduct or the information;

(

d) that all direct and indirect profits made, and all direct or indirect losses

avoided, be accounted for in the determination.

Loss avoided due to insider trading, tipping or recommending – sale of securities

187.3 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a sale of securities

in contravention of

section 57.2 (2) of the Act, other than a short sale, the loss

avoided is the aggregate of the losses avoided associated with all securities sold

in contravention of that subsection where, for the purposes of the calculation, the

loss avoided per security sold is the amount determined by the following formula:

A - B

where

the proceeds from the trade of the security, and

the volume-weighted average market price of the security over the 10 trading days

immediately following general disclosure of the material fact or material change.

Profit made due to insider trading, tipping or recommending – purchase of securities

187.4 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a purchase of securities

in contravention of

section 57.2 (2) of the Act, the profit made is the aggregate

of the gains associated with all securities purchased in contravention of that subsection where,

for the purposes of the calculation, the gain per security purchased is the amount

determined by the following formula:

A - B

where

if the security

(

i) was subsequently sold before the 10th trading day immediately

following general disclosure of the inside information, the price at which the security

was sold, or

(ii)

has not been sold or, if sold, was not sold before the 10th trading

day immediately following general disclosure of the inside information, the volume-weighted

average market price of the security over the 10 trading days immediately following

general disclosure of the inside information, and

the amount paid for the security by the person who contravened

section 57.2 (2)

of the Act.

Profit made due to insider trading, tipping or recommending – sale of securities

187.5 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a sale of securities

in contravention of

section 57.2 (2) of the Act, the profit made is the aggregate

of the gains associated with all securities sold in contravention of that subsection where,

for the purposes of the calculation, the gain per security sold is the amount determined

by the following formula:

A - B

where

the proceeds from the sale of the security, and

if the contravention was

(

i) a short sale and the short sale has been covered,

the price at which the purchase covering the short sale was made,

(ii)

a short sale

and the short sale has not been covered, the volume-weighted average market price

of the security over the 10 trading days immediately following general disclosure

of the inside information, or

(iii)

not a short sale, the volume-weighted average

market price of the security over the 10 trading days immediately following general

disclosure of the inside information.

Loss avoided due to front-running – sale of securities

187.6 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a sale of a security

in contravention of

section 57.3 (3) (

a) of the Act, other than a short sale, the

loss avoided is the aggregate of the losses avoided associated with all securities

sold in contravention of that paragraph where, for the purposes of the calculation,

the loss avoided per security sold is the amount determined by the following formula:

A - B

where

the proceeds from the sale of the security, and

the last price paid in the execution of the order that is the subject of the material

order information.

Profit made due to front-running – purchase of securities

187.7 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a purchase of a

security in contravention of

section 57.3 (3) (

a) of the Act, the profit made is the

aggregate of the gains associated with all securities purchased in contravention of

that paragraph where, for the purposes of the calculation, the gain per security purchased

is the amount determined by the following formula:

A - B

where

if the security

(

i) was subsequently sold before the execution of the last trade

that was the subject of the material order information, the price at which the security

was sold, or

(ii)

has not been sold or, if sold, was not sold before the execution

of the last order that was the subject of the material order information, the last

price paid in the execution of the last order that is the subject of the material

order information, and

the amount paid for the security by the person who contravened

section 57.3 (3) (a).

Profit made due to front-running – sale of securities

187.8 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a sale of securities

in contravention of

section 57.3 (3) (

a) of the Act, the profit made is the aggregate

of the gains associated with all securities sold in contravention of that paragraph

where, for the purposes of the calculation, the gain per security purchased is the

amount determined by the following formula:

A - B

where

the proceeds from the sale of the security, and

if the contravention was

(

i) a short sale and the short sale has been covered,

the price at which the purchase covering the short sale was made,

(ii)

a short sale

and the short sale has not been covered, the last price paid in the execution of the

order that is the subject of the material order information, or

(iii)

not a short

sale, the last price paid in the execution of the order that is the subject of the

material order information.

Tipping, recommending or encouraging another to transact – loss avoided

187.9 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a contravention

section 57.2 (3), (4) or (5) or

section 57.3 (4) or (5) of the Act, the loss avoided

is the amount determined by the following formula:

A + B

where

the value of the consideration received by the person for providing the information

or recommendation, and

the aggregate loss avoided by all persons who received the information or recommendation,

calculated under sections 187.3, 187.6 and 187.11 of this regulation, as applicable.

Tipping, recommending or encouraging another to transact – profit made

187.10 For the purposes of

section 155 (5) of the Act, unless the calculation is inconsistent

with a principle set out in

section 187.2 of this regulation, for a contravention

section 57.2 (3), (4) or (5) or 57.3 (4) or (5) of the Act, the profit made is

the amount determined by the following formula:

A + B

where

the value of the consideration received by the person for providing the information

or recommendation, and

the aggregate profit made by all persons who received the information or recommendation,

calculated under sections 187.4, 187.5, 187.7, 187.8 and 187.11 of this regulation,

as applicable.

Other contraventions

187.11 For the purposes of

section 155 (5) of the Act, for a contravention of

(

a) section 57 of the Act,

(

b) section 57.2 (2) of the Act in connection with a related financial instrument,

(

c) section 57.3 (3) (

b) of the Act,

(

d) section 57.3 (3) (

c) in connection with a derivative,

(

e) section 57.3 (3) (

d) of the Act, or

(

f) a provision referred to in

section 155 (5) of the Act that is not otherwise

referred to in this section,

profit made or loss avoided is, after considering the principles set out in

section 187.2

of this regulation, the amount determined by the court.

Commissions paid

187.12 In the case of a person who purchased or traded a security in contravention of the

Act, for the purposes of determining the profit made or loss avoided by the person

under

section 187.3, 187.4, 187.5, 187.6, 187.7, 187.8 or 187.11 of this regulation,

a commission paid by the person in relation to the purchase or trade may be excluded

from the determination.

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