According to Flaherty, the guidelines will provide greater transparency and increased opportunities for investors, and will improve the ability of Canadian capital markets to respond to global market developments.

"With today’s release of principles that will guide our government’s official designation of domestic and foreign stock exchanges, Canadians can make informed investment decisions confident that securities trade on well-governed, regulated and transparent markets," he stated.

"At the same time, foreign exchanges can now rely on clear rules in their efforts to attract Canadian investments," he added.

In Budget 2007, the Government updated and streamlined the identification of stock exchanges for purposes of the Income Tax Act. The new three-tiered system includes Designated Stock Exchanges, Recognized Stock Exchanges and Stock Exchanges.

Designation status is particularly important for Registered Retirement Savings Plan (RRSP) investors, as securities listed on designated exchanges are eligible RRSP investments. They are also eligible investments for Deferred Profit Sharing Plans, and will be eligible for the recently announced Tax-Free Savings Account.

The Department of Finance also released on 2nd July a complete list of current Designated Stock Exchanges, which include all former prescribed exchanges under the previous Income Tax Act provisions.

Under the income tax rules, any future additions to the list will be approved by the Minister of Finance following the process and criteria set out by Flaherty on Wednesday.