The Investment Dealers Association of Canada has posted its comment on a paper published earlier this year proposing the introduction of a principles-based regime for the regulation of derivatives markets in Quebec.

The comment notes that the IDA “welcomed with great interest” the publication, by the Autorité des marchés financiers du Québec, concerning derivatives regulation. It calls the proposed principles-based regime, “a promising new approach”.

However, it notes that this, “potentially has implications that are at once broader than the derivatives markets and more far-reaching than the Québec market.” It suggests that this approach is promising, “not just for derivatives but for all the other securities markets as well. Thus, implementation of the document’s recommendations constitutes, in a manner of speaking, a pilot project that may provide inspiration for a broader reform of securities regulation in Canada.”

The IDA comment also points out that as the AMF is the principal regulatory authority of the only derivatives exchange in Canada, “its legislative and regulatory guidelines have the potential to establish or modify the pan-Canadian standards on these markets.”

The AMF paper is the beginning of a process that will necessitate further consultation, the IDA suggests, and it encourages the government in Quebec to bring forward actual legislation promptly.

“Clearly, the IDA intends to continue to fully play its role as a self-regulatory organization on the Québec derivatives market, as well as in other Canadian jurisdictions. For this reason, it will track with great interest the development and subsequent introduction of this new regulatory system in Québec. For this reason as well, it hopes that its introduction will trigger harmonization across all jurisdictions and that its principles-based approach will rapidly spread to the other capital markets in Canada,” it concludes.