Model imposes charges to recover operational and capital costs caused by introduction of multiple marketplaces

Canadian securities regulators have approved the allocation model developed by Market Regulation Services Inc. to accommodate the introduction of new markets.

The OSC Bulletin reports that the Ontario Securities Commission and other regulators have approved the model that will impose a series of direct charges to recover operational and capital costs caused by the introduction of multiple marketplaces. RS will implement the proposed allocation of these charges immediately.

The model was originally proposed back in 2006, and it has been modified in response to comments received on the original proposal. RS originally proposed to recover from each marketplace the greater of $50,000 and RS’s actual costs, based on time tracking by RS staff, associated with the launch of that marketplace. RS has modified this proposal so that RS will now recover from each marketplace RS’s actual costs, whether greater than or less than $50,000.

It also originally proposed to recover Phase 1 Costs from the marketplaces for which RS is providing dedicated surveillance but cannot currently perform automated monitoring (all marketplaces other than Bloomberg Tradebook, the TSX and TSXV), with each contributing marketplace sharing the Phase 1 Costs equally. RS has modified this proposal so that RS will now recover the Phase 1 Costs from _all_ marketplaces for which RS is the regulation services provider that are in operation on the date of approval, including Bloomberg Tradebook, the TSX and TSXV.

This model is the first group of a number of pending charges and proposals relating to RS costs and fees. RS published a proposed fee model for public comment in 2007, and the regulators are continuing their review of that proposal. RS says it will be developing further proposals in relation to the costs to consolidate marketplace data and develop displays and tools to provide effective cross-market monitoring. “Such proposals are still subject to RS board review and approval, as well as regulatory approval, and so will be published separately,” it adds.