Quebec Securities Regulator Recommends Modernization Of Futures And OTC Derivatives Law

On May 4, 2006, the Quebec Autorité des Marchés Financiers (AMF) published for comment a paper setting forth its proposal for regulating futures and (to a certain extent) OTC derivatives markets in Quebec. The proposals recommend a "core principles" approach to the licensing of exchanges and clearing organizations doing business in Quebec, as well as a self-certification model with respect to the exchange and clearing organization rules.

The report itself does not address head-on some of the complicated issues with respect to bank issued index linked notes.

With respect to OTC derivatives, the AMF proposes that it would have jurisdiction to regulate the "retail" OTC market. It proposes a very wide definition of what is an OTC derivative. It would define the "retail" market as transactions that are not between two parties that meet qualification criteria (eg financial institutions, sophisticated parties of various sorts). Prospectus and registration requirements would apply to this