The View Outside What’s to be Learned from Other Jurisdictions?

1. The View OutsideWhat’s to be Learned from Other Jurisdictions? Tanis MacLaren Kempenfelt House Consulting Inc. OSC Academy – August 2012

2. Why Should the OSC Care About What Others are Doing? • Domestic agenda increasingly driven by initiatives at international level • Direct: G20, Financial Stability Board • Indirect: actions elsewhere that may make our market less competitive or more vulnerable • Often by decision makers who know little/nothing about securities markets • Very few issues that are purely domestic or entirely home-grown • Markets/$/players are global International Perspective - OSC Academy

3. Why Should the OSC Carecont’d • Legislative developments & implementation of changes elsewhere may drive need for changes in or reassessment of existing domestic rules • EU – Directive on Markets in Financial Instruments II (MiFID II) • US – Dobbs-Franks recently; Sarbanes Oxley before • Misc. Initiatives on fiduciary duties – Aus, UK, US etc. International Perspective - OSC Academy

4. Why Should the OSC Carecont’d • Strengths and weaknesses of others’ regimes may have direct effect here • E.g., foreign accounting profession and standards • We are going to be ‘tested’ against international standards – by IMF & by markets more generally • FSAP/ROSC processes (next year – again) • New requirements, new standards for both Securities, Financial Markets Infrastructures • Corporate governance standards and international investment preferences International Perspective - OSC Academy

5. What Can Be Learned? • Possible policy/practical responses to a given issue & experiences how they worked • Adopt/adapt rather than invent • Other ways to carry out regulatory functions that may be more effective or efficient • Other ways to measure outcomes/value of regulatory responses • What issues may be about to surface • Things that can be achieved if needed/ desired • Benefit from wider/different perspectives International Perspective - OSC Academy

6. Effective Engagement • Need to understand context of legislative and regulatory decisions • What is to be done, why and what else was considered • Requires more than just reading the other regulators’ rules or published papers • Helps to understand something of the economy & politics in the jurisdiction • Look beyond “developed” market regulators • Creativity and innovation often come from the margins • Specialist regulators with far greater experience • Biggest or oldest often is not the best. International Perspective - OSC Academy

7. Effective Engagement cont’d • Look to similar economies – size, nature of issuers • Australia; South Africa • Issues and approaches should be assessed for relevance & importance to Canadian markets • Not everything is material but very little is entirely irrelevant • Even if it isn’t relevant to the OSC now, that may change if the legislature, G20 or some other body thinks it is relevant for ‘good regulation’ International Perspective - OSC Academy

8. International Concerns • Risk assessment, mitigation & management • Greater/new systemic risk focus for securities regulators • Greater emphasis on risk assessment overall • New risks from old activities – money market funds • New risks from new activities • Risk-based supervision and the risks thereof • Patrolling the perimeter of regulation • Risks from outside traditional regulated activities • Exchange trading and central clearing of (formerly) OTC instruments • Sharing responsibility for central counterparties. International Perspective - OSC Academy

9. International Concerns cont’d • Dealing with implications of internationalization and fragmentation of trading • Stock exchange supervision relatively simple • Regulation of operations of ATS and other purely electronic trading venues is not – particularly ones that operate cross-border • Dealing with implications of global markets more generally International Perspective - OSC Academy

10. Where to Find Information • IMF/World Bank websites – ROSCs, FSAP reports, particularly more recent ones • Increasingly detailed descriptions of who does what and how • Regulator’s websites • UK & many Asia-Pacific regulators particularly good at explaining what they are doing and why • Building personal contacts at international meetings & asking questions, exchanging information International Perspective - OSC Academy

11. Where to Find Information • IOSCO website: www.iosco.org • Basel Committee on Banking Supervision • Particularly on risk issues - www.bis.org/bcbs/ • Free news summary services • Smartbrief.com – US and Global Markets summaries • Lexology.com – aggregator of law firm newsletters from around the world • Major accounting & legal firm newsletters/ publications • The Economist • If you see something that might be relevant to what someone else is doing – Share it! International Perspective - OSC Academy

12. Regulatory Structures • Form usually follows function(s), except when history prevails • Fads and fashions: integrated, functional and institutional structures • Functions, responsibilities & emphasis can be very different from what we are used to here. • Evolution and revolution • Decision-making: centralized vs. delegated • Tribunal functions: increasingly separated • Degree of transparency about rationale & actions International Perspective - OSC Academy