Securities Law & Instruments


OSC Rule 91-507 -- derivatives trade reporting obligations -- filer seeking relief from derivatives data reporting obligations in respect of financial transmission rights contracts issued by the filer -- relief granted from the requirement to report financial transmission rights transactions that are executed between the filer and its authorized market participants in the primary transmission rights market, subject to conditions.

Applicable Legislative Provisions

Ontario Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting, s. 42.



DECISION (Section 42 of Ontario Securities Commission Rule 91-507 Trade Repositories and Derivatives Data Reporting)

WHEREAS the Transmission Rights Contracts (as defined below) are derivatives (as such term is defined in Section 1 of the Ontario Securities Act (the "Act")) and are therefore subject to reporting obligations under Ontario Securities Commission (the "OSC" or the "Commission") Rule 91-507 Trade Repositories and Derivatives Data Reporting ("OSC Rule 91-507");

AND UPON the application of the Independent Electricity System Operator (the "IESO") to the Director (as such term is defined in Section 1 of the Act) for an order pursuant to Section 42 of OSC Rule 91-507 exempting the IESO and Authorized Market Participants executing transactions in Transmission Rights Contracts in the Primary Transmission Rights Market (each as defined below) from the reporting requirements under Part 3 of OSC Rule 91-507;

AND UPON the IESO having represented to the Director that:


1. the IESO is an independent, not for profit, nonshare capital corporation created pursuant to Part II of the Electricity Act, 1998 (Ontario) (the "Electricity Act");

2. the Government of Ontario has assigned the responsibility for creating and administering the IESO-administered markets to the IESO;

3. the IESO has been allocated the statutory mandate of meeting the following objects as set out in subsection 5(1) of the Electricity Act :

a. to exercise the powers and perform the duties assigned to the IESO under the Electricity Act, the Market Rules and its OEB License (as defined below);

b. to enter into agreements with transmitters giving the IESO authority to direct the operation of their transmission systems;

c. to direct the operation and maintain the reliability of the IESO-controlled grid to promote the purposes of the Electricity Act;

d. to participate in the development by any standards authority of standards and criteria relating to the reliability of transmission systems;

e. to work with the responsible authorities outside of Ontario to co-ordinate the IESO's activities with their activities;

f. to collect and provide the Ontario Power Authority and to the public, information relating to the current and short-term electricity needs of Ontario and the adequacy and reliability of the integrated power system to meet those needs; and

g. to operate the IESO-administered markets to promote the purposes of the Electricity Act;

4. the markets, established, administered and operated by the IESO in accordance with the Electricity Act consist of both physical and financial markets;

5. the physical market governs the real-time operation of the power system, allowing load and generation to be balanced, flows on the transmission system to be within limits and voltage and frequency to be maintained (the "Physical Market");

6. the financial market consists of the transmission rights market (the "Transmission Rights Market", together with the Physical Market, the "IESO Markets"), wherein market participants can acquire financial contracts linked to locational price differences across interties ("Transmission Rights Contracts");

7. in carrying out its objects, the IESO is empowered to and has developed a codified set of rules to govern the wholesale electricity marketplace in Ontario (collectively the "Market Rules");

8. the provisions of the Market Rules are complete codes, covering the form and content of all the transactions in the IESO-administered markets including the Transmission Rights Market;

9. all persons participating in the IESO Markets must be approved in advance by the IESO as authorized market participants in accordance with the Market Rules and are required to meet financial thresholds that are at least equal to those to be applied under OSC Rule 45-501 dealing with "accredited investors" ("Authorized Market Participants");

10. Transmission Rights Contracts are issued by the IESO to Authorized Market Participants in accordance with the auction process governed by the Market Rules (the "Primary Transmission Rights Market");

11. the Market Rules allow for the resale market of Transmission Rights Contracts (the "Secondary Transmission Rights Market"); and

12. the IESO does not administer or oversee the Secondary Transmission Rights Market;

Regulatory Oversight

13. the IESO is not in default of securities legislation in any jurisdiction in Canada;

14. the IESO operates pursuant to the license granted to it by the Ontario Energy Board (the "OEB") under the Ontario Energy Board Act, 1998 (the "OEB Licence")

15. the OEB is the sole regulatory board under the Electricity Act vested with the powers of oversight in connection with the business of the IESO, including its operation of the IESO Markets;

16. the IESO is bound to make certain reports to the Minister of Energy (the "Minister") pursuant to the Electricity Act and to the OEB pursuant to the OEB Licence;

17. the IESO-administered markets, including the Transmission Rights Market, are subject to monitoring and oversight by the OEB's Market Surveillance Panel (the "MSP");

18. the IESO and the OEB have entered into a protocol pursuant to which the IESO's market assessment unit provides assistance and support to the MSP in relation to matters involving monitoring, analysing, evaluating, investigating, reviewing and reporting on the IESO-administered markets (the "Protocol");

19. the Protocol is currently in force;

20. section 32 of the Electricity Act permits the IESO to make rules establishing and governing markets related to electricity. The IESO therefore, through its Board of Directors, has authority to make the Market Rules;

21. section 32(6) of the Electricity Act provides that the IESO shall not make a Market Rule unless it first gives the OEB an assessment of the impact of the rule on the interests of consumers with respect to prices and the reliability and quality of electricity service;

22. all transactions, including the Transmission Rights Contracts, concluded within the IESO-administered markets must conform to the Market Rules, and all participants in the Transmission Rights Market receive transaction confirmations from the IESO in accordance with the provisions thereof;

23. the IESO is exempt from the requirement to be recognized as an exchange under section 21 of the Act by Commission order issued pursuant to Section 147 of the Act and is exempt from the operation of National Instrument 21-101 by Director order issued under Section 15.1 of NI 21-101, each dated March 6, 2002 (the "Exchange Order");

24. the IESO is exempt from the requirements to file forms and fees in connection with trades which are exempt from prospectus and registration requirements with the Commission pursuant to Part 7of Commission Rule 45-501 by Commission order issued pursuant to Section 147 of the Act, dated March 28, 2002 (the "Exempt Distribution Order", together with the Exchange Order, the "Previous Orders"); and

25. the IESO, the OEB, the Minister and the Commission entered into a four-party information sharing arrangement on March 19, 2002 (the "Information-Sharing Arrangement");

AND UPON the Director being satisfied that exempting the IESO and Authorized Market Participants executing transactions in Transmission Rights Contracts in the Primary Transmission Rights Market from the reporting requirements under Part 3 of OSC Rule 91-507 would not be prejudicial to the public interest;

IT IS THE DECISION of the Director that, pursuant to section 42 of OSC Rule 91-507, the IESO and Authorized Market Participants executing transactions in Transmission Rights Contracts in the Primary Transmission Rights Market are exempt from the reporting requirements under Part 3 of OSC Rule 91-507;


a. the Previous Exemption Orders remain in force and effect;

b. the IESO continues to operate pursuant to a valid licence issued by the OEB;

c. the Information-Sharing Arrangement continues to be in effect;

d. each Transmission Rights Contract is linked to a specific intertie, and the aggregate volume of Transmission Rights Contracts issued in the Primary Transmission Rights Market for any intertie for any period of time is limited by the operating capacity of the intertie;

e. the IESO promptly complies with requests from the Commission, on an as-needed basis, to share (i) positional data, (ii) transactional data, (iii) valuation data, and (iv) transmission rights clearing account data, within IESO's possession in respect of the Transmission Rights Markets, including any information or documentation concerning such data, in a form acceptable to the Commission; and

f. the IESO shall not disclose to any person or company, including its market participants, any request by the Commission for data, information or documentation and shall maintain the confidentiality of the request and any response to it. Where disclosure may be required by law, the IESO will, to the extent permitted by law, inform the Commission of the disclosure requirement.

DATED October 30, 2014

"Kevin Fine"
Director, Derivatives
Ontario Securities Commission