31-601 - Registration Requirements [BCP Amendment - Lapsed]

Concurrently Published:

• BCN 2008/05 - Amendment of BC Policy 31-601 Registration Requirements (BCP 31-601) [BCN - Lapsed]

PART 2 CATEGORIES OF REGISTRATION
2.1 - Dealer
(h) An applicant for registration as a securities dealer, exchange contracts dealer, mutual fund dealer, real estate securities dealer or scholarship plan dealer must have a financial institution bond for a minimum of $200,000 coverage. An applicant for registration as an investment dealer must have a financial institution bond for coverage in the amount that the IDA -Pacific requires. Subject to the paragraph that follows, the bond must cover the applicant, its partners, directors, officers, salespersons (including dependent and independent contractors - see BCIN33-703) and other employees for a minimum of:

• fidelity
• on-premises loss of property
• in-transit loss of property
• forgery or alteration
• loss resulting from forged, altered, lost or stolen securities, and
• counterfeit currency
  [Rules s. 21(1)(a)].

An applicant for registration as a mutual fund dealer that does not hold client funds or securities and that is permitted by the Executive Director to maintain the lower level of working capital set out in section 10.3 of this policy must, as a minimum, maintain coverage relating to the first three bullets above [Rules ss. 19(5), 21(1)(a)].

An applicant for registration as an exchange contracts dealer that does not hold client funds or securities and that is permitted by the Executive Director to maintain the lower level of risk adjusted capital set out in section 9.4 of this policy must, as a minimum, maintain coverage relating to the first three bullets above [Rules ss. 19(4), 21(1)(a)].

In each case, the partners or directors of the applicant must state, by certified resolution, that they consider the amount of bonding adequate to cover insurable business risks [Rules s. 21(1)(b)].

PART 9 LIMITED DEALER - EXCHANGE CONTRACTS DEALER

9.1 General Requirements
Refer also to the general requirements set out in Parts 4 - 6 of this policy.

9.2 Description of Limited Dealer - Exchange Contracts Dealer
A registered exchange contracts dealer is a corporation or partnership that is authorized to trade exclusively in exchange contracts, forward contracts or both, subject to the scope of its conditions of registration [Rules s. 6(2)(c)(i)].  BC Instrument 31-503 Exchange Contract Dealers Trading in Commodity Pool Securities also permits a registered exchange contracts dealer, and individuals registered to trade on its behalf, to trade in Commodity Pool securities without additional registration requirements.

9.3 Forex dealers to register with the IDA- Pacific
A foreign exchange contract or "forex" contract is a security that is a forward contract involving a leveraged agreement between two or more parties to exchange different currencies at a future time or times, other than contracts traded on an exchange  recognized under sections 58 or 59 of the Securities Act.

A person seeking registration to trade in foreign exchange contracts must register with the IDA - Pacific as an investment dealer [Part 7 of this Policy], and not with the BC Securities Commission as an exchange contract dealer. (www.ida.ca)

9.4 Positive Risk Adjusted Capital
To be registered as an exchange contracts dealer, an applicant must maintain positive risk adjusted capital, but may calculate risk adjusted capital based on a minimum capital requirement of $100,000 instead of the minimum of $250,000 required by the Joint Regulatory Financial Questionnaire and Report [Rules s. 19(2), BC Form 33-902F].

If an exchange contracts dealer does not hold client funds or securities and is recognized by the Executive Director as an "introducing broker", it may calculate risk adjusted capital based on a minimum capital requirement of $75,000. [Rules s. 19(4)].

9.5 Proficiency Requirements for Trading Partner, Director or Officer
To be registered as a trading partner, director or officer of an exchange contracts dealer, the applicant must have successfully completed:

• the Derivatives Fundamentals Course (CSI) [Rules s. 62]
• the Futures Licensing Course (CSI) [Rules s. 62]
• the Canadian Commodity Supervisors Exam (CSI) [Rules s. 62], and
• if the applicant proposes to trade options, the Options Licensing Course and the Options Supervisors Course (CSI) [Rules s. 62]
  and have at least
• seven continuous years of relevant experience in the securities industry, or
• five continuous years of relevant experience in the securities industry with a dealer that trades in exchange contracts or forward contracts
  [Rules s. 61(1)].

9.6 Proficiency Requirements for Salesperson
To be registered as a salesperson of an exchange contracts dealer, the applicant must have successfully completed:

• the Derivatives Fundamentals Course [Rules s. 62]
• the Futures Licensing Course [Rules s. 62] and
• if the applicant proposes to trade options, the Options Licensing Course (CSI) [Rules s. 62].
  [Rules s. 62(1)]

9.7 Proficiency Requirements for Compliance Officer
Refer to Part 6 of this policy for proficiency requirements of compliance officers and branch managers.