Application under section 147 of the Securities Act (Ontario) (OSA) to exempt Omgeo Canada Matching Ltd. from recognition as a clearing agency under subsection 21.2(0.1) of the OSA.
Applicable Legislative Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 21.2(0.1), 147.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, c. S. 5, AS AMENDED
IN THE MATTER OF
OMGEO CANADA MATCHING LTD./SERVICES D'APPARIEMENT OMGEO CANADA LTÉE AND OMGEO LLC
(Section 147 of the Act)
WHEREAS OMGEO CANADA MATCHING LTD./SERVICES D'APPARIEMENT OMGEO CANADA LTÉE ("Omgeo Canada") and its parent company, OMGEO LLC (collectively, the "Filers"), have jointly filed an application dated December 16, 2010 (the "Application") with the Ontario Securities Commission (the "Commission") for an order, pursuant to section 147 of the Act, exempting Omgeo Canada from the requirement in subsection 21.2(0.1) of the Act to be recognized as a clearing agency (the "Clearing Agency Recognition Requirement");
AND WHEREAS the Filers have represented to the Commission that:
1. Omgeo Canada is a private company which was incorporated under the Business Corporations Act (Ontario) on September 28, 2007 and both its registered and head office are located in Toronto, Ontario.
2. Omgeo Canada is wholly-owned, directly, by Omgeo LLC. Omgeo LLC carries on business as a global provider of technology and information services (including central trade matching services) to the financial community through its subsidiaries (including Omgeo Canada) and is subject to regulatory and oversight requirements of the United States Securities and Exchange Commission in respect of Omgeo LLC's central trade matching services in the United States.
3. The principal shareholders of Omgeo LLC are the Depository Trust & Clearing Corporation (which through its subsidiaries, provides clearing, settlement and information services for various financial instruments) and Reuters Personal Focus Inc. (the principal holding company for the Thomson Reuters Markets Group, a US $1.9 billion provider of information and technology solutions to the worldwide financial community).
4. Since September 30, 2007, Omgeo Canada has carried on business as a matching service utility in Ontario ("MSU") as described in, and in accordance with the requirements of, National Instrument 24-101 Institutional Trade Matching and Settlement and the companion policy thereto.
5. Specifically, Omgeo Canada provides centralized automated facilities for the matching of institutional trades of equity and debt securities and transmits matched trades to a clearing agency for clearing and settlement.
6. Omgeo Canada does not:
(a) act as an intermediary in paying funds or delivering securities in connection with trades in securities;
(b) provide centralized facilities for the clearing of trades in securities, other than limited facilities for comparing data respecting the terms of settlement of a trade;
(c) provide centralized facilities as a depository of securities; or
(d) perform central counter-party, multilateral netting and/or guarantor functions.
7. Omgeo Canada has provided extensive and comprehensive information and documentation to the Commission in the Application and in its MSU Notice of Operations in Form 24-101F3.
8. Omgeo LLC has agreed to share information with the Commission and ensure Omgeo Canada's compliance with applicable regulatory requirements.
9. The Application addresses specific criteria set out in Appendix A of Commission Staff Notice 24-702 Regulatory Approach to Recognition and Exemption from Recognition of Clearing Agencies dated March 19, 2010 which are relevant to the Applicant's MSU activities in Ontario (the "Appendix A Criteria").
AND WHEREAS based on the Application and the representations the Filers have made to the Commission, the Commission has determined that Omgeo Canada satisfies the relevant Appendix A Criteria and that it would not be prejudicial to the public interest to grant the order requested;
IT IS HEREBY ORDERED by the Commission, pursuant to section 147 of the Act, that Omgeo Canada be exempt from the Clearing Agency Recognition Requirement as of March 1, 2011;
PROVIDED THAT Omgeo Canada and Omgeo LLC comply with the terms and conditions attached hereto as Appendix "A".
DATED at Toronto this 15th day of February, 2011.
Terms and Conditions for Exemption from Recognition as a Clearing Agency in Ontario
Systems and Technology
1.1 For each of its systems that supports trade matching, Omgeo Canada shall:
(a) develop and maintain
(i) reasonable business continuity and disaster recovery plans;
(ii) an adequate system of internal control over those systems; and
(iii) adequate information technology general controls, including without limitation, controls relating to information systems operations, information security, change management, problem management, network support and system software support;
(b) in accordance with prudent business practice, on a reasonably frequent basis and, in any event, at least annually,
(i) make reasonable current and future capacity estimates;
(ii) conduct capacity stress tests to determine the ability of those systems to process transactions in an accurate, timely and efficient manner; and
(iii) test its business continuity and disaster recovery plans; and
(c) promptly notify staff of the Ontario Securities Commission (OSC or Commission) of any material systems failure, malfunction or delay.
1.2 For each of its systems that supports trade matching, Omgeo Canada shall ensure that a qualified party conducts an independent systems review in accordance with NI 24-101 and prepares a report regarding its compliance with section 1.1(a).
2. Omgeo Canada shall file annual audited financial statements within 90 days after the end of its financial year.
3. Where Omgeo Canada has outsourced any of its key functions, it has appropriate and formal arrangements and processes in place that permit it to meet its obligations and that are in accordance with industry best practices. The outsourcing arrangement provides regulatory authorities with access to all data, information, and systems maintained by the third party service provider required for the purposes of regulatory oversight of Omgeo Canada.
Information Sharing and Regulatory Cooperation
4.1 Omgeo Canada shall provide such information as may be requested from time to time by, and otherwise cooperate with, the Commission or its staff, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information.
4.2 Omgeo Canada shall share information and otherwise cooperate with other recognized and exempt clearing agencies as appropriate, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information.
5. Omgeo LLC shall take such actions as are within its ability to assist Omgeo Canada in meeting the terms and conditions of this order.
6. Omgeo LLC shall provide such information as may be requested from time to time by, and otherwise cooperate with, the Commission or its staff, subject to any applicable privacy or other laws governing the sharing of information and the protection of personal information.
7. Omgeo Canada shall not expand their business in Ontario into other clearing agency functions without the prior approval of the Commission.