The Amendments implement phase two of the CSA's long
standing project on enhancing a registrant's relationship with
its clients, called the client relationship model (the
"CRM2"). The CRM2 imposes additional
reporting requirements over a three-year transition period from
2013 through 2016. The new requirements are designed to ensure that
investors receive enhanced disclosure regarding the costs and
compensation associated with their investments and the performance
of their investments.
When the Amendments were proposed they raised a number of issues
relating to performance reporting, including the choice by the CSA
of the "money-weighted rate of return" (the
"MWRR") over the "time-weighted
rate of return" (the "TWRR"), which
historically has been the preferred industry approach to
performance reporting. The Staff Notice clarifies that a firm may
show returns using TWRR, as long as the firm also provides the
return using MWRR in accordance with the requirements of NI 31-103.
Furthermore, the CSA does not plan on publishing an approved
formula to calculate MWRR as there are different ways of
The Staff Notice also provides further guidance on how the
Amendments may affect sole exempt market dealers
("EMD") as sole EMDs do not normally
hold client assets. The applicability of some of the Amendments
depends on whether a registered firm holds client assets or, if it
does not, whether certain other specific criteria apply. In
circumstances where sole EMDs do hold client assets, they must
deliver account statements with the prescribed information along
with position cost information. Furthermore, since holding
clients' assets is a clear indication of an ongoing client
relationship, a sole EMD is also subject to the requirement to
deliver an annual report on charges and other prescribed
compensation. The Staff Notice provides examples of when sole EMDs
are considered to have limited, transactional relationships with
their clients as opposed to ongoing client relationships.
For further information on the applicability of the Amendments
or the Staff Notice, please refer to the individual regulator's
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
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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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