The final report of the Commodities Futures Act Review Committee was tabled in Ontario on Wednesday, calling for a principles-based approach to derivatives regulation.

The committee, chaired by Carol Pennycook, a partner at Davies, Ward, Phillips & Vineberg LLP and former chairwoman of the Ontario Securities Commission’s Commodity Futures Advisory Board, recommends: adopting a core principles approach to the regulation of exchanges and other market participants; a role for securities regulation of contracts that are not transacted on an exchange (over-the- counter or OTC derivative transactions) and that involve retail investors, and, ensuring compatibility with regulatory regimes in other relevant jurisdictions.

The committee’s report will be referred to a legislative committee that will review it, hear the opinions of interested parties, and report back.

The committee, composed of leading practitioners, lawyers and regulators, was appointed in May 2005 to undertake a comprehensive review of Ontario’s commodity futures legislation.

“I want to thank all of the committee members for the hard work and commitment that went into preparing this report,” said Minister of Government Services and Minister Responsible for Securities Regulation, Gerry Phillips. “They have put forward recommendations designed to make our regulatory system more efficient and to promote increased investor confidence and protection which will be carefully reviewed and considered.”

“Since the Commodity Futures Act was originally introduced in 1979, advances in technology together with the globalization of financial activities have resulted in dramatic changes in capital and commodities markets. The importance of keeping pace with these changes underscored the need to review and update the Commodity Futures Act at this time,” Phillips said. “This report supports our commitment to vibrant capital markets underpinned by a regulatory system that serves today’s and tomorrow’s investors well.”