Dealer and adviser registration categories and requirements
throughout Canada are numerous, varied and complex. After several
years of consultation, the Canadian Securities Administrators (CSA)
have published National Instrument 31-103 Registration
Requirementsand Exemptions (NI 31-103), which
contains amendments to securities legislation and local rules that
are intended to harmonize, streamline and simplify dealer and
adviser registration categories and requirements.
The main changes brought about by NI 31-103 are:
The adoption of a 'business trigger' for dealer
registration in lieu of the 'trade' trigger that currently
exists in all provinces and territories other than
Registration categories and related requirements are to be
harmonized across Canada, and while the number of categories of
registration has been reduced significantly, four new categories of
registration have been introduced:
exempt market dealer, which applies in all provinces and
replaces the category of limited market dealer in Ontario as well
as Newfoundland and Labrador;
restricted dealer, a category for dealers engaged in a limited
area of dealing activities with restrictions and proficiency
requirements tailored to the dealing activities;
restricted portfolio manager, a category for advisers
restricted to advising with respect to specified securities with
restrictions and proficiency requirements tailored to the advising
investment fund manager, which requires all managers of public
and private investment funds to be registered regardless of whether
they are in the business of dealing or advising.
The introduction of a registration exemption framework for
international dealers and international advisers.
Exam-based (rather than course-based) proficiency requirements
have been prescribed for representatives of each category of
dealer, with certain exceptions.
Minimal capital requirements under NI 31-303 will impose higher
requirements than do current standards.
Registered firms will be required to identify each potential
and actual conflict of interest and to provide prior written
disclosure of a conflict of interest to a client, while dealing
with such conflicts in a fair, equitable and transparent
Significant harmonization and narrowing of the exemptions from
the dealer and adviser registration requirements across
Canadian residency requirements for all registrants in all
provinces and territories are to be eliminated.
In Québec, the Autorité des marchés
financiers (AMF) has undertaken a major overhaul of the regulatory
framework for mutual fund dealers and scholarship plan dealers.
In all jurisdictions other than Ontario, NI 31-103 becomes
effective on September 28, 2009. In Ontario, it becomes effective
on a date to be announced by the Ontario government. A number of
requirements will not take effect immediately, but will be subject
to transition periods to give market participants time to comply
with the new requirements once they become effective. Transition
timelines are available to registered firms to afford them an
opportunity to comply with a number of new requirements.
For a detailed discussion of these changes, please see our
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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