Canadian regulators say they plan to conduct additional research, including a cost-benefit analysis, in connection with the proposed electronic audit trail project.

A joint notice from the Canadian Securities Administrators, Market Regulation Services Inc., the Bourse de Montréal Inc., and the Investment Dealers Association of Canada is designed to provide an update on the status of the TREATS project since the last notice on the subject was published in March.

Since the March 2006 notice, the CSA published a notice regarding proposed amendments to certain trading rules that has the intended effect, among other things, of extending the deadline for the implementation of an electronic audit trail by dealers and inter-dealer bond brokers until January 1, 2010.

A Request for Proposals was also issued to solicit firm proposals from suppliers to address the business and technical requirements for the TREATS solution, and to provide information that would help the regulators in their selection process and the decision to move forward with the TREATS initiative.

It notes that work has been completed on the data modeling for equities to outline the requirements for equity securities, and provide dealers and marketplaces with a resource for understanding their responsibilities to comply with the audit trail requirements.

“As a result of the work to date concerning data modeling, the results of the RFP, and the consultations with the Industry Working Group, the regulators have identified additional issues that require further detailed examination,” it reports. “These issues include consideration of the current models that exist in other jurisdictions, a review of which aspects create the most benefits, as well as the completion of the data modeling and a cost benefit analysis.” The regulators expect that this additional work will be completed by December 2007. They have commenced work on a CBA with the assistance of external consultants.