Canada: CSA Publish FAQ Regarding New Registration Regime

On December 18, 2009, staff of the Canadian Securities Administrators ( (CSA) published a staff notice ( (the FAQ) setting out their answers to frequently asked questions regarding National Instrument 31-103 Registration Requirements and Exemptions ( (31-103) and amendments to National Instrument 33-109 Registration Information ( 33-109). 31-103 and the amendments to NI 33-109 came into effect on September 28, 2009 (the Effective Date). The questions were compiled from informal public enquiries received by CSA members and the responses are based on views of CSA staff. Summarized below are responses to some of the more substantive issues.

Chief compliance officer proficiency requirements and exemptions

Under Part 3 of 31-103, an individual who satisfies the proficiency requirements for a chief compliance officer (CCO) of a portfolio manager (PM), also satisfies the proficiency requirements for a CCO of a mutual fund dealer (MFD), exempt market dealer (EMD) and investment fund manager (IFM). There is, however, no provision to accommodate for MFD, EMD and IFM registrations a CCO of a PM whose proficiency is grandfathered for the PM registration under subsection 16.9(2) of 31-103. The FAQ indicates that the CSA plan to issue an order providing a CCO of a PM whose proficiency is grandfathered under subsection 16.9(2) with an exemption from the proficiency requirements applicable to a CCO of an MFD, EMD or IFM where the firm was registered as a PM on the Effective Date and the individual was designated as the firm's CCO on the Effective Date and remains so registered.

The FAQ reiterates that the grandfathering of a CCO's proficiency requirements is only available in those Canadian jurisdictions where prior to the Effective Date the firm was required to identify its compliance officer on the National Registration Database ( (NRD), as these were the only jurisdictions where compliance officers were required to satisfy proficiency requirements. The jurisdictions that had this requirement were British Columbia, New Brunswick and Ontario. While an individual acting as personne responsable (ou chef) de la conformité in Quebec could have been acting in a similar capacity to a compliance officer, he or she did not have to be identified on NRD. In this regard, the FAQ makes clear that an individual acting as personne responsable (ou chef) de la conformité in Quebec could have his or her proficiency grandfathered only if he or she was identified on NRD on the Effective Date as the firm's CCO in British Columbia, New Brunswick or Ontario. Otherwise he or she is required to satisfy the proficiency requirements under 31-103 by no later than September 28, 2010.

Exempt market dealer underwriting activities

The FAQ clarifies that, while an EMD can trade a prospectus-qualified security and provide a purchaser with a copy of the prospectus where an exemption from the prospectus requirement would be available, an EMD cannot underwrite a prospectus-qualified distribution even if the EMD only distributes securities to clients that may purchase securities offered under a prospectus exemption. EMDs are restricted to underwriting distributions made under an exemption from the prospectus requirement.

Sale of principal protected notes by mutual fund dealers in Quebec

The FAQ clarifies that pursuant to the exemption under paragraph 9º of section 3 of the Securities Act ( (Quebec) (QSA) an MFD in Quebec does not have to register as an EMD to sell market-linked GICs. Further, pursuant to paragraph 14º of section 3 of the QSA, an MFD in Quebec does not have to register as an EMD for the sale of market-linked notes issued or guaranteed by a bank or an authorized foreign bank, unless the market-linked notes confer a right of payment ranking lower than a deposit contemplated in paragraph 9º of section 3 of the QSA and are entrusted to the issuer or guarantor of the market-linked notes.

Investment fund manager registration requirement

The FAQ reiterates that registration as investment fund manager is required where the collective investment vehicle being managed is an "investment fund". While the FAQ refers to the guidance provided in Companion Policy NI 81-106CP Investment Fund Continuous Disclosure (, what constitutes an "investment fund" is not clarified further in the FAQ. The FAQ confirms, however, the CSA staff's view that an investment fund is not restricted to funds that invest in securities, and provides as examples funds that invest in uranium or gold bullion as funds that may fall within the definition of an investment fund.

The FAQ clarifies that a firm that qualifies for the one-year exemption under section 16.4 of 31-103 from the requirement to register as an IFM and registers as an IFM prior to end of such one-year period must comply with the requirements of 31-103 as soon as it becomes registered as an IFM.

Foreign dealer trading through or to a registered dealer

The FAQ confirms that the dealer registration exemption in section 8.5 of 31-103, for trades made solely through or to a registered dealer, is available to foreign dealers trading on behalf of their clients provided that all trading activity that occurs within the local jurisdiction be done through or with the locally registered dealer. The intermediation by the foreign dealer does not in itself mean that the trade in the local jurisdiction was not made "solely" through a registered dealer. However, if the foreign dealer or its client is engaged in other trading activity in the local jurisdiction in connection with the transaction, then it is not a trade "solely" through a registered dealer and the exemption in section 8.5 is not available. The FAQ provides as an example, a foreign dealer or its client contacting the purchaser in the jurisdiction and directly soliciting the purchase of securities. "Trading" is broadly defined under securities legislation and includes acts directly or indirectly in furtherance of a trade.

Registered firm relying on international dealer and adviser exemptions

The FAQ clarifies that a registered firm can rely on the international dealer exemption under section 8.18 of 31-103 or the international adviser exemption under section 8.26 of 31-103 in the local jurisdiction whether it is registered there or elsewhere in Canada. The required notification to clients is met by notifying the client that it is not registered in the jurisdiction in respect of the activities for which the exemption is being relied upon.

Insurance requirements for firm registered as portfolio manager and investment fund manager

The FAQ confirms that insurance requirements are not cumulative. A firm registered in the categories of PM and IFM must maintain insurance that satisfies the highest insurance requirement of its categories of registration.

The FAQ clarifies that the "assets under management" referred to in the PM insurance calculation under section 12.4 of 31-103 refers only to those client assets which the PM holds or to which it has access. The "assets under management" referred to in the IFM insurance calculation under section 12.5 of 31-103 refers only to the assets under management of its own funds for which the registrant is acting as IFM.

Requirement to deliver Form 31-103F1 Calculation of Excess Working Capital

The FAQ clarifies that despite the one-year transition under section 16.11 of 31-103 for previously registered firms to comply with the new capital requirements, there is no corresponding transition for the requirement to deliver a Form 31-103F1 Calculation of Excess Working Capital. The FAQ states that where the firm relies on section 16.11, it must also deliver the capital calculations required under the former requirements (which continue to apply during the one-year transition period), if any.

Despite their being no transitional relief to deliver Form 31-103F1, the FAQ provides that in Ontario, the regulator does not expect a firm that calculates its working capital based on consolidated financial statements in reliance on the transitional relief in section 16.11 to deliver a Form 31-103F1.

Failing to meet requirement under 31-103 before end of transition period

The FAQ suggests that where a firm fails to meet a requirement under 31-103 before the end of the applicable transition period it should immediately contact the regulator. According to the FAQ, a registrant in this situation might be required to cease registerable activity until the firm complies with the requirement, or a temporary exemption might be granted, depending on the circumstances.

Requirement to file Form 33-109F6 by September 30, 2010

All firms registered prior to the Effective Date that continue to be registered, are required under section 6.1 of NI 33-109 to file a Form 33-109F6 with its principal regulator by no later than September 30, 2010. The FAQ indicates that supporting documents and audited financial statements do not have to be provided with the form. When completing the form, the firm should not check off any of the boxes for section 1.3 as the reason for submitting the form and should make a note in its cover letter or e-mail that it is submitting the form further to section 6.1 of NI 33-109.

Requirement that foreign firm be registered in foreign jurisdiction where based

The CSA staff note that foreign firms applying for registration are normally expected to be registered in the relevant category in their home jurisdiction. This is stated to be part of the fit and proper assessment to be registered in a Canadian jurisdiction and is also relevant to the CSA's compliance oversight capabilities.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.