Regulation of Derivatives Markets in Québec

September 19, 2006

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Regulation of Derivatives Markets in Québec

Letter Summary:

We note some satisfaction that AMF has exempted CFA charter holders from some of the educational requirements proposed in the new framework as the CFA program covers derivatives in greater detail and is more thorough than most, if not all, of the current Canadian Securities Institute courses. We would welcome the opportunity to work with the AMF to extend the proposed exemptions to other education requirements of the new derivative framework where the relevant material is covered within the CFA program. Moreover, we believe that the basic course necessary for registration as a retail investment representative must be upgraded to include the knowledge required for trading equity options, as is the case in the US. The less stringent Canadian requirements partly explain why the equity option market is underdeveloped in our country. The retail investor will be better served by more qualified investment representatives.

Overview of the Council’s Comments:

The CAC is disappointed that the AMF has not integrated their efforts to better regulate the derivative sector with those of other regulators in Canada. The CAC has a clear preference for one set of regulatory rules to apply to market participants, regardless of the province in which they carry on capital markets activities. Although the CAC does not have firm position on the best method to achieve this consistence set of rules, we believe that derivative products and market participants should be regulated in the same manner across the country. We would encourage the AMF to work closely with the other regulators in Canada in taking the next steps contemplated in the AMF paper.