On May 14, 2010, the British Columbia Securities Commission
(BCSC) granted relief to CMC Markets UK plc and CMC Markets Canada
Inc. (together, CMC Markets) that will permit CMC Markets to
distribute "contracts for difference" (CFDs) and foreign
exchange contracts (forex) to British Columbia investors without
the necessity of a prospectus filing. A copy of the BCSC order
(BCSC Order) is available here.
Under similar exemptions issued in 2009 by the Ontario and
Québec securities regulators, CMC Markets distributes CFDs
and forex to both accredited investors and non-accredited investors
(retail investors) in Ontario and Québec in accordance with
requirements of the Securities Act (Ontario) and the
Derivatives Act (Québec), respectively. Please see
BLG's Securities & Capital Markets Alert OSC Issues
Staff Notice 91-702 Offerings of Contracts for Difference and
Foreign Exchange Contracts to Investors in Ontario October
Borden Ladner Gervais LLP is proud to have represented CMC
Markets in Canada in applying for and obtaining registration as an
investment dealer and membership with the Investment Industry
Regulatory Organization of Canada (IIROC) and obtaining the
exemptions in Ontario, Québec and now British Columbia.
The granting of the BCSC Order speaks to the continued efforts
of the Canadian Securities Administrators (CSA) to establish a
harmonized position on the trading and distribution of
over-the-counter (OTC) derivatives, including CFDs and forex, to
retail investors across the country.
Amongst other conditions, and as with the OSC and AMF orders,
the relief granted to CMC Markets under the BCSC Order is
conditional on (i) the distribution of a risk and product
disclosure document to investors, (ii) CMC Markets UK plc remaining
registered with the UK Financial Services Authority and (iii) CMC
Markets Canada Inc. remaining registered as an investment dealer in
the relevant provinces and a member of IIROC.
Under National Instrument 31-103 Registration Requirements
and Exemptions, firms that seek to distribute CFDs and forex
(products that have a leverage or margin component) to Canadian
investors (both accredited and non-accredited investors) generally
must be registered as investment dealers in the relevant provinces
and become members of IIROC. We understand that members of the CSA
will not permit firms registered only as exempt market dealers to
trade in CFDs and forex, even if they restrict their offerings to
accredited investors only.
For further information on the exemptions available in British
Columbia, Ontario and Quebec for the distribution of CFDs and forex
in those provinces and the evolving regulatory regime, please
contact the authors of this Alert or one of the leaders of
BLG's Securities and Capital Markets Group. More information
about BLG's Securities and Capital Markets Group is available
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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