The Autorité des marchés financiers
(AMF), Quebec's financial services regulator, published Decision No. 2015-PDG-0132
(the Extension Decision) yesterday (August 27, 2015). The Extension
Decision (released in French only) postpones the effective date of
the revocation of the so-called blanket derivatives exemption under
the Quebec Derivatives Act (QDA)
(the Blanket Decision) by nine months, from September 5, 2015 to
June 5, 2016.
The Extension Decision will be particularly welcome news for
foreign futures commission merchants (FCMs) which have been trading
foreign and MX listed futures for Quebec institutional clients on
the basis of various exemptions for a number of years and faced the
prospect of having to shut down that business by September
4th. Buy-side institutional clients in the Quebec market
will also have more breathing room to adapt their futures trading
arrangements in light of decisions made by foreign FCMs to seek
derivatives dealer registration in Quebec or discretionary
exemptive relief, or to discontinue their current futures trading
business in Quebec.
According to its terms, the Extension Decision is intended to
give foreign derivatives market participants with trading
relationships in the Quebec institutional market more time to
register or to implement changes to their operational systems and
procedures to support trading through Quebec-registered
The decision also notes the impact which revocation of the
Blanket Decision on September 5 would have had on qualified
Quebec-resident investors and on derivatives exchanges operating in
Quebec (including specifically the Montréal Exchange), as
well as concerns over the preparedness of certain market
participants in dealing with the consequences of that
While the nine-month extension is good news, FCMs which will be
seeking to register as derivatives dealers in Quebec will be
expected to proceed expeditiously with their registration
applications under the QDA and any associated exemption requests.
The timeline for the registration process and for obtaining the
required membership with the Investment Industry Regulatory
Organization of Canada (IIROC) typically unfolds over the course of
several months as applicants implement detailed proficiency,
compliance, financial, operational and systems-related requirements
As noted in our previous posts, the revocation of
the Blanket Decision will eliminate relief that is currently
available under that exemption from the derivatives qualification
requirement under the QDA for trades in non-Quebec listed futures.
The Extension Decision does not address this issue but the
nine-month extension also gives more time for possible legislative
changes or replacement exemptions to be implemented to permit
trading activities on global futures exchanges for Quebec
"accredited counterparties" to continue
As previously noted, the revocation of the Blanket Decision does
not affect the statutory exemption under the QDA for OTC
derivatives transactions with Quebec "accredited
counterparties" undertaken under the terms of that
The Extension Decision also provides transitional exemptive
relief from the requirement to deliver a risk acknowledgement form
(RAF) to individual "accredited investors" in connection
with transactions in the specified derivatives covered by the
Blanket Decision. The RAF-related exemptive relief will also remain
in place until June 5, 2016 when the Blanket Decision is to be
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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