Section 147 of the Act and Section 15 of NI 21-101 -- exemption granted, for 2004 and 2005, from the requirement in CNQ's recognition order and National Instrument 21-101, respectively, to cause to be performed an independent systems review and report.
Ontario Statutory Provisions Cited
Securities Act, R.S.O. 1990, c. S.5, as am., s. 147.
National Instrument Marketplace Operation 21-101, ss. 12.1(b) and 15.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER 5, AS AMENDED (the "Act")
IN THE MATTER OF
CANADIAN TRADING AND QUOTATION SYSTEM INC.
(Section 147 of the Act, Section 15 of National Instrument 21-101)
WHEREAS Canadian Trading and Quotation System Inc. ("CNQ") has filed an application dated December 15, 2004 (the "Application") to the Ontario Securities Commission (the "Commission") requesting an order pursuant to section 147 of the Act exempting CNQ from section 7(b) of the Commission order dated May 7, 2004 recognizing CNQ as a stock exchange (the "Recognition Order") for the years 2004 and 2005;
AND WHEREAS CNQ has applied to the Director under section 15 of National Instrument 21-101 Marketplace Operation ("NI 21-101") for an order exempting CNQ from section 12.1(b) of NI 21-101 for the years 2004 and 2005;
AND WHEREAS section 7(b) of the Recognition Order and section 12.1(b) of NI 21-101 require CNQ to annually cause an independent review and written report, in accordance with established audit procedures and standards ("Independent System Review" or "ISR"), of CNQ's controls for ensuring it is in compliance with requirements in the Recognition Order and NI 21-101 to maintain capacity and integrity of its systems that support order entry, order routing, execution, data feeds, trade reporting and trade comparison, capacity and integrity requirements (collectively, the "CNQ System");
AND WHEREAS CNQ has represented to the Commission and the Director that
1. CNQ's current trading and order entry volumes are less than 1% of the current design and peak capacity of the CNQ System and CNQ has not experienced any failure of the CNQ System;
2. CNQ is a start-up marketplace and the cost of an ISR would represent a significant portion of CNQ's revenue from trading fees;
3. the CNQ System is monitored 24 hours a day, 7 days a week to ensure that all components continue to operate and remain secure;
4. on a reasonably frequent basis, and in any event, at least annually, CNQ
(i) makes reasonable current and future capacity estimates for the CNQ System;
(ii) conducts capacity stress tests of the CNQ System to determine the ability of the CNQ System to process transactions in an accurate, timely and efficient manner;
(iii) develops and implements reasonable procedures to review and keep current the development and testing methodology of the CNQ System; and
(iv) reviews the vulnerability of the CNQ System and data centre computer operations to internal and external threats including physical hazards, and natural disasters;
5. CNQ has established disaster recovery and business continuity plans covering all foreseeable contingencies; and
6. CNQ has completed a management review and written report of the CNQ System and of its controls for ensuring it will continue to comply with these representations and has provided a copy of the report to staff of the Commission;
AND WHEREAS the Commission and the Director have received certain other representations and undertakings from CNQ in connection with the Application;
AND WHEREAS based on the Application and the representations and undertakings made to the Commission and the Director, the Commission is satisfied that granting an exemption from section 7(b) of the Recognition Order would not be prejudicial to the public interest;
AND WHEREAS based on the Application and the representations and undertakings made to the Commission and the Director, the Director is satisfied that granting an exemption from section 15 of NI 21-101 would not be prejudicial to the public interest;
IT IS HEREBY ORDERED by the Commission that pursuant to section 147 of the Act CNQ is exempted from the requirements of section 7(b) of the Recognition Order for the years 2004 and 2005;
AND IT IS HEREBY ORDERED by the Director that pursuant to section 15 of NI 21-101 CNQ is exempted from the requirements of section 12.1(b) of NI 21-101 for the years 2004 and 2005;
1. CNQ shall promptly notify the Commission of any material failures of and changes to the CNQ System and of any failure to comply with the representations set out herein.
2. CNQ shall in 2005 and 2006 complete updated management reviews of the CNQ System and of its controls for ensuring it continues to comply with the representations set out herein and shall prepare written reports of its reviews, which shall be filed with staff of the Commission no later than June 30, 2005 for the 2005 report and June 30, 2006 for the 2006 report.
December 24, 2004.
"Paul M. Moore"
"H. Lorne Morphy"