Given

• that a dynamic and efficient capital market in Canada contributes to economic growth
through the effective mobilization of savings and cost-effective access to capital for new
and existing businesses and for governments;

• that high standards of investor protection and market integrity are critical to preserving
investor confidence; and

• that modern, balanced and responsive securities regulation is essential to ensuring a
dynamic, fair, efficient and competitive capital market.

Goal

Consistent with and focusing on the Task Force Mandate: recommend revisions to
Canadian securities legislation and regulation to achieve a dynamic, fair, efficient and
competitive capital market.

Objectives

1. Address central principles relating to key areas of securities legislation and regulation.

2. Define principles and outline rules clearly to provide direction to policy makers, but do
not draft legislation or regulations.

3. Achieve an appropriate balance between investor protection and economic growth and
between principles and rules.

4. Consider how to provide direction to interpretation, implementation and administration
of regulations by regulatory staff to ensure continuity of policy objectives.

Methodology

1. Accept the securities commissions’ mandate as to “protect investors, preserve market
integrity and enhance efficiency and competitiveness.”

2. Draw on but do not be confined by existing legislation in Canada, US and Europe, as well
as USL project.

3. Draw on latest regulatory thinking in Canada and abroad.

4. Consider domestic and global capital markets’ developments and trends, new financial
instruments and techniques and investors’ needs and expectations.

5. Balance benefits of international harmonization with sensitivity to market access, especially
for small- and medium-size enterprises.

6. Maintain neutrality as between provincial and federal jurisdiction.

7. Challenge established assumptions, e.g., regarding effectiveness of disclosure, need for
identical or similar requirements for all issuers, what constitutes conflicts of interest and
what does not.

8. Move from focus on theoretical to effective disclosure, especially in relation to retail
investors.

9. Exploit IT potential to eliminate excessive paper load, increase reliability and speed and
reduce cost.

10. Consider importance of plain language in investor disclosure.

11. Consider entrenching a cost/benefit obligation as in the UK for the FSA.

Process

1. Conduct a broad consultation across the country with a wide variety of constituencies.

2. Develop and follow a communications plan to explain objectives, encourage consultation,
disseminate report.

3. Develop and follow a detailed budget, not to exceed $7 million, including fees, travel,
consultants, professional staff, and externally generated studies, publication and
communication plan.

4. Adhere to one-year timeframe for publication.

5. Post-publication, follow up on communication, consultation and advocacy.