des marchés financiers (AMF), Quebec's
financial services regulator, has issued a notice to firms which can no longer rely on
the so-called blanket derivatives exemption under the Quebec Derivatives Act (QDA) that it expects
applications for derivatives dealer registration and SRO membership
to be submitted by September 4, 2015 i.e., prior to revocation
effective September 5 of the AMF's blanket derivatives
As previously noted, Canadian and foreign market participants
(including U.S. and other non-Canadian FCMs) which have relied on
this exemption should be taking urgent action to review their
current derivatives markets activities in Quebec and determine
whether to register under the QDA, whether any other statutory
relief may be available, whether there may be a basis to apply for
focused discretionary relief under the QDA and whether any current
client arrangements with Quebec counterparties should be
discontinued by the September 5, 2015 deadline.
Decision No. 2009-PDG-0007 (the Blanket
Decision) was always intended by the AMF to provide transitional
exemptive relief to the market in conjunction with the enactment of
the QDA. In 2010, the AMF had signaled its intention to give
reasonable notice of any proposed changes to the exemption.
The revocation of the Blanket Decision nevertheless introduces
fundamental changes to the regulatory framework governing
longstanding trading relationships with Quebec institutional
clients for the trading of listed futures and options.
The Blanket Decision currently provides an exemption from the
dealer and adviser registration requirements and the derivatives
qualification requirement under the QDA in relation to trades in
specified categories of derivatives previously regulated under the
Act prior to the enactment of the QDA. Among
other conditions, the Blanket Decision requires that a person
seeking the benefit of these exemptions "carry out their
derivatives activities solely with accredited investors within the
meaning and according to the conditions set forth in Regulation 45-106 [respecting Prospectus
Significantly, the revocation of the Blanket Decision does not
affect the statutory exemption under Quebec derivatives legislation
for OTC derivatives transactions with "accredited
counterparties" undertaken under the terms of that
The AMF's most recent notice dealing with the Revocation
Decision calls on firms to submit an application on
Form 33-109F6 Firm Registration and an
application for membership with the Investment
Industry Regulatory Organization of Canada (IIROC) by
September 4 at the latest. The notice does not provide further
guidance on how firms that are currently relying on the Blanket
Exemption are expected to address the derivatives qualification
requirement under the QDA.
The AMF further states that it "generally expects
applicants to have completed the registration and membership
application process within six months following the filing of
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