Canadian Securities Regulators Announce that TSX Inc. will Act as an Information Processor for Exchange-Traded Securities



    TORONTO, June 5 /CNW/ - The Canadian Securities Administrators (CSA)
today published CSA Staff Notice 21-309 Information Processor for
Exchange-Traded Securities other than Options. The notice informs the public
that TSX Inc. (TSX) will act as an information processor for exchange-traded
securities other than options, commencing July 1, 2009 for a period of five
years.
    "In today's multiple marketplace environment, data consolidation is
important for both marketplace participants and investors. An information
processor would ensure that they have access to information from all of the
marketplaces," said Jean St-Gelais, CSA Chair and President, Autorité des
marchés financiers.
    In July 2006, the CSA published a notice inviting any interested party to
file an application to become an information processor for exchange-traded
securities. An information processor provides consolidated data to investors
and market participants, facilitating compliance with regulatory requirements.
The Bourse de Montréal Inc. (MX), CDS Inc. (CDS), and TSX submitted
applications. Since the initial filing, the MX and CDS withdrew their
applications. Over the course of the application process, the TSX also revised
its proposal. The CSA is of the view that the revised TSX proposal meets all
of the criteria set out in the 2006 notice. The information processor is
designated as a market participant under the Securities Act (Ontario) and has
been recognized as an information processor under the Securities Act (Québec).
    During the review process, the CSA evaluated the applications to assess
the applicants' ability to meet the requirements of National Instrument 21-101
Marketplace Operation including requirements related to: the applicant's
systems and performance capabilities; standards and procedures for the
collection, processing, distribution and publication of data; marketplace
access to the information processor on fair and reasonable terms; sufficiency
of financial resources; qualification of personnel; and existence of other
information processors. The CSA also considered the applicants' governance,
processes to manage inherent conflicts of interest, fee structure and the
fairness of their revenue allocation methods.
    CSA Staff Notice 21-309 is available on the websites of the various CSA
members. For more information, please refer to the attached backgrounder.

    The CSA, the council of securities regulators of Canada's provinces and
territories, coordinates and harmonizes regulation for the Canadian capital
markets.

    
              CSA Staff Notice 21-309 Information Processor for
                Exchange-Traded Securities Other Than Options

                            Questions and Answers

    1.  What information will TSX as the information processor offer?

        TSX as the information processor will disseminate the following
        products:
        -  "Consolidated Data Feed", which will provide access to pre- and
           post-trade market data from each contributing marketplace;
        -  "Consolidated Last Sale", which will provide consolidated,
           real-time last sale data from all contributing marketplaces; and
        -  "Canadian Best Bid and Offer", which will provide a consolidated
           best bid and offer for all equity securities

        The inclusion of a consolidated depth-of-book product will depend on
        the outcome of the discussions relating to the proposed CSA
        Trade-Through Protection Rule (amendments to National Instrument
        21-101 Marketplace Operation and NI 23-101 Trading Rules published on
        October 17, 2008). The consolidated depth-of-book product would
        provide a single consolidated view of the order book.

    2.  Are market participants required to purchase the information provided
        by the information processor?

        No. The information processor is not the only source from which
        real-time data can be obtained. Participants may rely on other data
        sources to obtain the data that they need, such as information
        vendors or direct data feeds from the marketplaces.

    3.  How will TSX address the conflicts of interest, whether real or
        perceived, associated with it being a competing marketplace and an
        information processor?

        The primary steps to be taken by TSX in addressing potential
        conflicts of interest are as follows:

        -  a Governance Committee with marketplace representation will be
           established that will make decisions with respect to significant
           areas of the operations of the information processor;
        -  policies and procedures will be established to ensure that TSX
           staff who are not involved in operating the information processor
           do not acquire knowledge of, or access to, competitor data or
           client information;
        -  agreements with contributing marketplaces will include detailed
           terms that will ensure, on a commercial basis, that data
           transmitted to the TSX information processor will not be
           inappropriately manipulated by TSX; and
        -  third party technology, that will be independent from the
           technology of the exchanges owned and operated by TSX, will be
           used to consolidate the data.

        In addition, TSX has provided undertakings (included at Appendix B to
        the Notice) to address governance and conflicts, including that the
        TSX information processor will not give the Toronto Stock Exchange or
        TSX Venture Exchange an unfair advantage with respect to their data
        as compared to other marketplaces.

    4.  Why is TSX allowed to act as an IP given the recent data outages?

        The recent data outages related to the dissemination of TSX's own
        trading data. The Consolidated Data Feed technology to be used for
        the information processor function was unaffected and continued to
        disseminate consolidated data for all other marketplaces that use the
        service. More information can be obtained from the TSX.

    5.  What is the impact of the information processor on fees for market
        data?

        The information processor's fee model maintains the status quo with
        respect to market data fees. Marketplace participants will continue
        to pay current fees charged by each marketplace for consolidated data
        obtained through the information processor. We expect that data fees
        will not increase as a result of the introduction of an information
        processor. In addition, we note that we will be monitoring
        marketplaces to ensure that the fees they charge, and pass through
        the information processor, do not unreasonably prohibit, condition,
        or limit access to their services.

        The CSA will begin a review of market data fees and will, upon the
        completion of this review, determine what, if any, steps may be
        needed to address any issues. We note that because it is important to
        have an information processor established now to consolidate data
        from multiple marketplaces, we decided not to delay the introduction
        of the information processor until the completion of this review.
    





For further information:

For further information: Carolyn Shaw-Rimmington, Ontario Securities
Commission, (416) 593-2361; Sylvain Théberge, Autorité des marchés financiers,
(514) 940-2176; Mark Dickey, Alberta Securities Commission, (403) 297-4481;
Ken Gracey, British Columbia Securities Commission, (604) 899-6577; Ainsley
Cunningham, Manitoba Securities Commission, (204) 945-4733; Wendy
Connors-Beckett, New Brunswick Securities Commission, (506) 643-7745; Natalie
MacLellan, Nova Scotia Securities Commission, (902) 424-8586; Barbara
Shourounis, Saskatchewan Financial Services Commission, (306) 787-5842; Janice
Callbeck, Department of the Attorney General, Prince Edward Island, (902)
368-4552; Doug Connolly, Financial Services Regulation Div., Newfoundland and
Labrador, (709) 729-2594; Fred Pretorius, Yukon Securities Registry, (867)
667-5225; Louis Arki, Nunavut Securities Office, (867) 975-6587; Donn
MacDougall, Northwest Territories Securities Office, (867) 920-8984


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