FAIR Canada urges the Ontario Securities Commission to require Alpha to have a model for its exchange where there is a proper separation of the commercial and regulatory functions, in light of international standards and in order to protect investors. There is an inherent conflict of interest in the “for profit” status of an exchange and that same exchange acting as a regulator of listed companies.  Specific measures which are consistent with other developed countries’ exchanges must be adopted to manage the conflict of interest in listing regulation. Consideration should be given to transferring the listing functions of Canadian exchanges to an independent SRO that can be responsible for the creation and administration of core ongoing listing rules.   

In the submission, FAIR Canada recommends that the Commission defer public comment on the Alpha Exchange application and points out that it is premature for the Commission to make a decision on the Alpha application given other market developments.  FAIR Canada also provides its response to the specific questions in the OSC’s Request for Comments in the event that the application is not held over.  If responsibility for regulation is not transferred to an independent SRO, FAIR Canada recommends that  Alpha should be required to set up an independent subsidiary with the majority of its board consisting of independent directors and this subsidiary would have final decision-making powers regarding listing policy, rule-making and budgetary matters.  FAIR Canada makes other comments on Alpha’s application in order to protect investors.

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