In Decision No. 2009-PDG-0064 in the matter of CMC Markets
UK Plc (June 16, 2009), the Quebec Autorité des
marchés financiers (AMF) granted a temporary exemption
to a London-based firm regulated by the UK Financial Services
Authority from requirements under section 82 of the Derivatives
Act (Quebec) (QDA) in connection with the offering of
contracts for differences (CFDs) in Quebec. This is one of the
first exemption decisions granted by the AMF since the coming into
force of the QDA on February 1, 2009. The QDA regulates all
activities with respect to OTC and exchanges traded-derivatives
carried on in Quebec.
Section 82 of the QDA requires that a person other than a
"recognized regulated entity" who "creates or
markets a derivative" be qualified by the AMF (under rules
which have yet to be prescribed) before the derivative is offered
to the public (the Qualification Requirement). The person must also
have the derivative authorized by the AMF (the Authorization
Requirement). The Authorization Requirement is not currently in
In this decision, the AMF exempted the applicant firm from the
Qualification Requirement in connection with the "creation and
marketing" of CFDs through a proprietary electronic trading
platform and through its Canadian affiliate which is registered as
a dealer with the AMF and is a member of The Investment Industry
Regulatory Organization of Canada (IIROC). The Canadian registered
affiliate is responsible for KYC and suitability reviews on
The decision states that the applicant firm had previously
furnished detailed information to the AMF relating to the terms and
conditions of the products and associated risks, trading methods,
execution and risk management systems, margin requirements,
The decision is conditional on (1) the applicant firm conducting
all CFD-related activities in Quebec through its electronic trading
platform or through a registered representative of the Canadian
registered affiliate, (2) the applicant firm, the Canadian
registered affiliate and its registered representatives carrying on
this business in compliance with applicable IIROC rules,
requirements applicable to registered firms under the QDA and
related regulations and any other derivatives-related rules
applicable to their activities, (3) the applicant firm informing
the AMF on a timely basis of any material changes to its business
and of (4) any disciplinary actions against it, the Canadian
registered affiliate or its registered representatives with respect
to their CFD-related business, and (5) delivery on an annual basis
of the applicant firm's audited financial statements and a
statement of the number of CFDs entered into with Quebec
counterparties over the preceding financial period.
The exemption is granted retroactively to February 1, 2009 and
will expire automatically on the earliest of June 16, 2010 or the
date of the coming into force of regulations implementing the
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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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