The guidance is meant to address CSA concerns that captive
dealers are in a conflict of interest between their financial
incentive to sell securities of the related or connected issuer and
their regulatory obligations. To respond to such conflicts, captive
dealers are encouraged to implement CSA procedures outlined in the
Notice (or their own alternatives) including: developing policies
and procedures that describe how they will identify and respond to
conflicts of interest and a potentially onerous obligation of
establishing an independent review committee to conduct a variety
of tasks, including product due diligence. This committee is also
expected to identify those products that pose too severe a conflict
of interest to be distributed generally.
Whether or not a captive dealer adopts the practices set out in
the Notice will be considered during compliance reviews.
While most of the guidance is directed at incumbents, the CSA
advise that new applicants for registration as captive dealers will
be subject to additional scrutiny. The key factors in a review of a
registration application will be the likelihood of harm to
investors and to the capital markets.
The CSA advise that the Notice may be useful to other
registrants too. This suggests that the guidance may eventually be
considered best practice for EMDs that are not "captive
dealers" but distribute securities of related or connected
The Notice is silent on key issues such as the composition of
the proposed independent review committee or which products pose
conflicts of interest so severe that they should not be
distributed. As a result, absent further CSA guidance, it may take
some time for consistent market practices to emerge.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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