CSA Makes Proposals to Improve Regulatory Oversight of OTC Derivatives

The Canadian Securities Administrators (CSA) has published for comment Consultation Paper 91-403 entitled ‘Derivatives: Surveillance and Enforcement’. The CSA Derivatives Committee prepared the paper which sets out a series of proposals by that committee that are designed to improve regulatory oversight of over-the-counter (OTC) derivatives transactions, while maintaining consistency with international developments. This is the second of a series of eight consultation papers to be published over the next few months that build on the regulatory proposals contained in Consultation Paper 91-401 OTC Derivatives Regulation in Canada published on 2 November 2010.

Under the regulatory framework proposed by the committee, Canadian securities regulators would conduct comprehensive surveillance and monitoring of OTC derivatives, obtain the authority to enact robust market conduct rules related to OTC derivatives and take enforcement action against misconduct in the OTC derivatives markets.

“To improve the regulation of OTC derivatives markets, the G20 has emphasised the importance of transparency in these markets and their protection against abuse,” said Bill Rice, chair of the CSA and chair and chief executive officer (CEO) of the Alberta Securities Commission. “To implement this phase of the G20 commitments, the CSA Derivatives Committee has developed proposals that would assist securities regulators in monitoring market participants and enforcing new standards of conduct that have been developed to deter abuses in these markets. We hope that these proposals will generate necessary commentary and feedback from market participants that will assist us in assessing them.”

The public is encouraged to comment on the proposals in the Consultation Paper, which outline various initiatives including enhanced market surveillance, greater international collaboration and the extension of enforcement powers to cover trading in OTC derivatives. Investors and marketplace participants are invited to submit their comments until 25 January 2012.


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