NIN 2000/32 - Republication for Comment of Proposed National Instrument 33-102 and Proposed Companion Policy 33-102CP - Registrant Dealings with Clients [NIN - Rescinded]
| Published Date: | 2000-07-21 |
|---|---|
| Effective Date: | 2000-07-20 |
The Proposed National Instrument and Proposed Policy are initiatives of the CSA. The Proposed National Instrument is expected to be adopted as a rule in each of British Columbia, Alberta, Manitoba, Ontario, Nova Scotia and Newfoundland, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the CSA. The Proposed Companion Policy is expected to be adopted as a policy in all jurisdictions represented by the CSA.
If the Investment Dealers Association of Canada and the Mutual Fund Dealers Association adopt rules containing the substantive requirements that are set out in the Proposed National Instrument, the Commission will reconsider the need for the Proposed National Instrument.
Purpose of the Proposed National Instrument and Proposed Policy
The purpose of the Proposed National Instrument and Proposed Policy is to ensure that clients dealing with registrants are fully informed about the products they are purchasing and the risks that they face.
Background
In November 1997, the Canadian Securities Administrators (the “CSA”) published for comment:
| Proposed National Instrument 33-102 | Distribution of Securities at Financial Institutions (“1997 Draft National Instrument 33-102") |
| Companion Policy 33-102CP | Distribution of Securities at Financial Institutions (“1997 Draft Policy 33-102CP") |
| Proposed National Instrument 33-103 | Distribution Networks (“1997 Draft National Instrument 33-103") |
| Proposed National Policy 33-201 | Networking and Selling Arrangement Notices (“1997 Draft National Policy 33-201") |
| Proposed National Instrument 33-104 | Selling Arrangements (“1997 Draft National Instrument 33-104") |
| Companion Policy 33-104CP | Selling Arrangements (“1997 Draft Policy 33-104CP") |
(collectively, “1997 Draft Instruments and Policies”) along with notices that relate to each National Instrument.1
1 NIN#97/49
These Notices provide further background on the 1997 Draft Instruments and Policies.
The 1997 Draft Instruments and Policies were based on thePrinciples of Regulation Re: Full Service and Discount Brokerage Activities of Securities Dealers in Branches of Related Financial Institutions2;
2;NIN#88/40
Principles of Regulation Re: Distribution of Mutual Funds by Financial Institutions;3
3NIN#88/48
Principles of Regulation Re: Activities of Registrants Related to Financial Institutions4
4NIN#90/16
(collectively, the “Principles of Regulation”).
During the comment period on the 1997 Draft Instruments and Policies, which expired on February 27, 1998, the CSA received submissions from seven commenters. The CSA thank all commenters for providing their comments on the 1997 Draft Instruments and Policies.
The CSA have considered at length the comments received on the 1997 Draft Instruments and Policies. In response to these comments, the CSA have substantially revised the 1997 Draft Instruments and Policies. The revisions have resulted in the Proposed National Instrument and the Proposed Policy, which are being published for a 60 day comment period. Once the Proposed National Instrument and Proposed Policy are enacted, the Principles of Regulation will lapse.
Summary of the Changes to the 1997 Draft Instruments and Policies
A chart containing the provisions of the 1997 Draft Instruments and Policies, a summary of the comments received and the CSA response is attached as Appendix A. This Notice discusses the significant changes made to the 1997 Draft Instruments and Policies.
General Comments
Two comments appeared frequently in the letters received. First, commenters indicated that there ought to be harmonization of the requirements contained in the Principles of Regulation throughout the CSA jurisdictions, unless there are compelling reasons for regional differences. Second, commenters submitted that if the rules are required, they ought to apply to all registrants and not just those that operate out of the branches of a financial institution. These two general comments motivated many of the changes that have been proposed.
The following review deals with each of the 1997 Draft Instruments and Policies in turn and highlights the major changes.
1997 Draft National Instrument 33-102 - Distribution of Securities at Financial Institutions
The two most significant changes are (1) that the requirements contained in section 2.1 for identifiably separate premises have been dropped; and (2) that the requirement for networking notices have been dropped.
Section 2.1, as it was proposed, was premised on the belief that client confusion over the entity with which the client is dealing would be reduced by the use of identifiably separate premises. While separate premises do serve to reinforce the message that the client is dealing with a different entity, they may impose substantial costs and inconvenience to registrants. Submissions have been made, and the CSA agree, that concerns regarding client confusion may be dealt with through other means, such as disclosure. As such, the requirement for identifiably separate premises has been eliminated.
The second substantial change follows from the experience that regulators have gained over the years that the Principles of Regulation have been in place. In that time, regulators have gained the experience necessary to state what is and is not acceptable in networking arrangements. Accordingly, all provisions relating to networking notices in this and the other instruments have been deleted. All general rules relating to potential issues raised by networking notices (margin, easy access to loans, tied selling, compensation, transfer of client information, client confusion, etc.) are appropriately dealt with by requirements already in place in CSA jurisdictions or will be addressed by the Proposed National Instrument and the Proposed Policy.
Several provisions of the 1997 Draft National Instrument 33-102 have been retained in the Proposed National Instrument and broadened to apply to all registrants. For example, section 7.1 which deals with the settlement of accounts has been included in the Proposed National Instrument. Section 2.3 requiring registrants to give additional disclosure to customers relating to the subject of leverage has been extended to apply to all registrants in their dealings with retail clients.
The requirement for consent to the disclosure of confidential client information is dealt with in Part 6. The requirement now applies to all registrants that propose to share retail client information with any third party. The CSA has examined An Act Respecting Access to Documents Held by Public Bodies and the Protection of Personal Information, R.S.Q., c. A-2.1, which is applicable in Québec, andthe Personal Information Protection and Electronic Documents Act, S.C. 2000, c. C.5 (the “Personal Information Act”) which received Royal assent on April 13, 2000. The provisions of thePersonal Information Act will apply within a province after three years unless the Governor-in-Council provides an exemption. The CSA is of the view that Part 6 is consistent with the provisions of the Personal Information Act. If, in three years, circumstances have changed and a province has introduced legislation covering the disclosure of confidential information, the CSA may reconsider Part 6.
Other provisions have been deleted from 1997 Draft National Instrument 33-102 because the CSA are of the view that securities legislation governs the activities. For example, Part 3 on registrable activities, section 4.1 on dual employment and section 4.2 on compensation are not required as all jurisdictions have other provisions in place governing these areas. Part 5 on referral fees is dealt with in CSA Notice 33-304 Distribution Structures Committee Position Paper, and, in British Columbia, by section 53 of the Securities Rules.
1997 Draft Policy 33-102CP
In light of the large number of amendments proposed for 1997 Draft National Instrument 33-102 and the view that many of the provisions are already covered by existing requirements in securities legislation, only sections 4.5 and 5.2 have been included in the Proposed Policy. The remaining provisions have been deleted.
1997 Draft National Instrument 33-103 - Distribution Networks
This entire instrument has been deleted.
1997 Draft National Instrument 33-104 - Selling Arrangements
The effect of the rule was to prohibit tied selling of products between the financial institution and the securities dealer operating out of its branches. The entire instrument has been deleted and replaced by a provision in the Proposed National Instrument that is based on the prohibition against tied selling contained in National Instrument 81-105 - Mutual Fund Sales Practices.
1997 Draft Policy 33-104CP
This companion policy is not necessary because of the deletion of 1997 Draft National Instrument 33-104.
1997 Draft National Policy 33-201 - Networking and Selling Arrangement Notices
The CSA intend to take the necessary actions to repeal or amend the requirement to file networking notices that appears in the regulations and policies of the CSA jurisdictions. With 10 years experience, the CSA are of the view that registrants are able to determine what is and is not an acceptable networking and selling arrangement through an examination of existing securities legislation and position papers. Accordingly, this policy, which deals with the processing of these notices, is being withdrawn and will not be reformulated. In British Columbia, the Commission intends to amend section 84 of the British Columbia Securities Rules to require a registrant that intends to enter into a networking arrangement with a savings institution or insurer to file a notice if the savings institution or insurer is not a related party of the registrant.
Specific Comment Requested
Disclosure in the Financial Institutions Act (British Columbia)
In certain circumstances, the British Columbia Financial Institutions Act (the “FIA”) requires disclosure of specific information to a customer if a person arranges a transaction under which a third party provides a service or product to the customer. One circumstance that triggers application of the FIA occurs when the person, who is acting with the approval of a financial institution, might reasonably be mistaken for an employee or representative of the financial institution.5
5See section 90(2) Financial Institutions Act, R.S.B.C. 1996, c. 141 and B.C. Reg. 333/90 Marketing of Financial Products Regulation.
In such an instance, the information that must be disclosed includes
- the relationship between the financial institution and the third party,
- the nature and extent of any business or financial interest that the financial institution and the third party have in each other,
- the nature and extent of any interest the financial institution has in the transaction, including any commission or other remuneration,
- the identity of the person paying the commission or other remuneration, and
- the prohibition against tied selling.
While securities legislation in most jurisdictions requires disclosure of the relationship between registrants and related or connected parties and other conflicts of interest disclosure, that disclosure is not the same as the disclosure required under the FIA.
Specific comment is requested on whether it would be appropriate to include disclosure provisions in National Instrument 33-102 (or other securities legislation) that are similar to the provisions set out in the FIA, given the existing disclosure required by securities legislation. Detailed reasons should accompany any comment.
Bill C-38 - An Act to Establish the Financial Consumer Agency Act of Canada and to Amend Certain Acts in Relation to Financial Institutions
Bill C-38, An Act to Establish the Financial Consumer Agency Act of Canada and to Amend Certain Acts in Relation to Financial Institutions, was recently introduced by the federal Parliament. Bill C-38 contains a provision6
6See section 119.
authorising the Governor-in-Council to make regulations respecting the disclosure of information by banks or any prescribed class of banks. The CSA will review with interest any regulations the federal government may introduce and may, at that time, revise the disclosure required under National Instrument 33-102.
Bill C-38 also contains a restriction on coercive tied selling and a provision that a bank shall disclose the prohibition on coercive tied selling.7
7See section 118.
Specific comment is requested on whether it would be appropriate for National Instrument 33-102 to require registrants to provide the same disclosure of the prohibition on tied selling that Bill C-38 requires of banks.
Principles of Regulation and Form 4A
Once National Instrument 33-102 is enacted, the Principles of Regulation will lapse. Consequently, registrants will no longer be able to use Form 4A or, in Québec, Form 3A for the registration of individuals.
Consequential and Related Amendments
In order to avoid inconsistencies between the Securities Rules and the Proposed National Instrument, the Consequential Amendments published for comment with this Notice will be required. These include amendment of the definition of “branch office”; amendments relating to disclosure of referral fees; removal of references to “administration officer” with relation to the compliance function where a registrant carries on business in a branch of a financial institution; and amendment of the filing requirements for networking arrangements.
Comments
Interested parties are invited to make written submissions with respect to the Proposed National Instrument, the Proposed Policy and the Consequential Amendments. Submissions received by September 19, 2000 will be considered.
Submissions should be made in duplicate to:
British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
Manitoba Securities Commission
Ontario Securities Commission
Office of the Administrator, New Brunswick
Registrar of Securities, Prince Edward Island
Nova Scotia Securities Commission
Securities Commission of Newfoundland
Registrar of Securities, Northwest Territories
Registrar of Securities, Yukon
Registrar of Securities, Nunavut
c/o John Stevenson, Secretary
Ontario Securities Commission
20 Queen Street West
Suite 1900, Box 55
Toronto, Ontario M5H 3S8
jstevenson@osc.gov.on.ca
Submissions should also be addressed to the Commission des valeurs mobilières du Québec as follows:
Claude St Pierre, Secretary
Commission des valeurs mobilières du Québec
800 Victoria Square
Stock Exchange Tower
P.O. Box 246, 22nd Floor
Montréal, Québec H4Z 1G3
claude.stpierre@cvmq.com
A diskette containing the submissions (in DOS or Windows format) should also be submitted. As the Act requires that a summary of written comments received during the comment period be published, confidentiality of submissions cannot be maintained.
Questions may be referred to any of:
Wayne Alford
Legal Counsel
Alberta Securities Commission
(403) 297-2092
wayne.alford@seccom.ab.ca
Ross McLennan
Director, Registration
British Columbia Securities Commission
(604) 899-6500
(800) 373-6393 (in B.C.)
rmclennan@bcsc.bc.ca
Douglas R. Brown
Counsel and Director, Legal and Enforcement
Manitoba Securities Commission
(204) 945-0605
dbrown@cca.gov.mb.ca
Andrew Nicholson
Deputy Administrator, Capital Markets
Office of the Administrator, Securities Branch
New Brunswick Department of Justice
(506) 658-3021
Andrew.Nicholson@gov.nb.ca
Susan W. Powell
Securities Analyst
Securities Commission of Newfoundland
(709) 729-4875
SPOWELL@mail.gov.nf.ca
Katharine Tummon
Registrar of Securities, Northwest Territories
(867) 873-7490
Katharine_Tummon@gov.nt.ca
Elaine Anne MacGregor
Deputy Director, Capital Markets
Nova Scotia Securities Commission
(902) 424-7768
macgreea@gov.ns.ca
Samantha VanGenne
Deputy Registrar of Securities
Registrar of Securities, Nunavut
(867) 920-6354
Samantha_VanGenne@gov.nt.ca
Tracey Stern
Legal Counsel, Market Regulation
Capital Markets Branch
Ontario Securities Commission
(416) 593-8167
tstern@osc.gov.on.ca
Mark Gallant
Deputy Registrar Securities Division
Registrar of Securities, Prince Edward Island
(902) 368-4552
mlgallant@gov.pe.ca
Sophie Jean
Policy Advisor
Commission des valeurs mobilières du Québec
(514) 940-2199 ext. 4578
sophie.jean@cvmq.com
Terry Ford
Deputy Director, Registration
Saskatchewan Securities Commission
(306) 787-5876
terry.ford.ssc@govmail.gov.sk.ca
Richard Roberts
Registrar of Securities, Yukon Territory
(867) 667-5225
rroberts@gov.yk.ca
DATED at Vancouver, British Columbia, on July 20, 2000
Douglas M. Hyndman
Chair
Ref: Sections 57 and 84 Securities Rules NIN#88/40
NIN#88/48
NIN#90/16
NIN#97/49
NI 81-105
Form 4A
Section 90(2), Financial Institutions Act (BC) and B.C. Reg 333/90
Bill C-38
An Act Respecting Access to Documents Held by Public Bodies and the Protection of Personal Information, R.S.Q., c. A-2.1,
Personal Information Protection and Electronic Documents Act, S.C. 2000, c. C.5
APPENDIX A
SUMMARY OF COMMENTS RECEIVED AND THE RESPONSE OF THE CANADIAN SECURITIES ADMINISTRATORS
| NOV. 1997 DRAFT | REVISED DRAFT | COMMENTS RECEIVED | CSA RESPONSE |
| 1997 PROPOSED NATIONAL INSTRUMENT 33-102 DISTRIBUTION OF SECURITIES AT FINANCIAL INSTITUTIONS | |||
| Section 1.1
Definitions | Deleted | A commenter requested clarification on what constitutes a branch for the purposes of this instrument. Ongoing technological advancements are already making the concept of a physical “branch” irrelevant. | The CSA are of the view that it is not necessary to include a definition of “branch office” in this national instrument. “Branch office” is defined in the securities legislation of certain CSA jurisdictions. |
| Section 1.2
Application | Proposed NI 33-102
Part 2, Part 3 and Part 6 | Some commenters indicated their expectation that the proposed instruments would be applicable only to retail clients. In their view, a number the provisions of 1997 Proposed National Instrument 33-102 will further erode the efficiency with which corporate and institutional markets can be served at a time when Canadian financial institutions are facing increasing competition from global players not subject to similar restrictions. It was suggested that the proposed instruments be revised so as to limit their applicability to retail clients, perhaps to be defined as natural persons. | The CSA agree and require disclosure regarding the nature of the product, leverage and client confidentiality to be provided to retail clients only. |
| Section 2.1
Branch Office | Deleted | Commenters submitted that the need for floor to ceiling separation will impose significant costs on Canadian financial institutions and their related dealers and is not practical. It was argued that artificial separation of premises and separate telephone lines are not effective means of protecting the investor or alleviating investor confusion. In their view, there is no rationale for making a distinction between bank owned dealers and other market participants who offer a broad range of financial services to their customers all within one office. | The CSA are of the opinion that retail client confusion may be addressed in a number of ways, including disclosure. Disclosure is required by sections 2.1 and 6.2 of the Proposed National Instrument. Section 2.2 of the Companion Policy provides that it is the registrant’s responsibility to ensure that clients understands with which legal entity they are dealing. |
| Section 2.2
Disclosure | Proposed NI 33-102
Section 6.2 | Commenters agreed that the terms of the disclosure set out in this section (i.e. securities are not insured by a government deposit insurer, are not insured by the bank and may fluctuate in value) are appropriate. However, given the proliferation of disclosure and other documents that clients receive when opening accounts, and thereafter, they suggested that a separate document not be required. Commenters were also not convinced that this disclosure is significantly more important than other disclosure such as to require that additional steps be required in connection with this disclosure, such as obtaining the client’s acknowledgment of the disclosure or making inquiries to determine that the client understands the disclosure. | It is the view of the CSA that it is imperative for retail clients to know and understand the distinction between bank and other products of financial institutions and securities. It is the responsibility of the registrant to ensure that the client knows and understands the distinction. Consequently, the provision requiring disclosure has been maintained. In addition, the registrant must obtain an acknowledgement from the retail client that the client has read the disclosure. |
| Section 2.3
Additional Disclosure | Proposed NI 33-102
Sections 2.1 and 2.2 | Commenters questioned whether clients are confused about the necessity of repaying a loan borrowed to purchase securities. It was suggested that common risk disclosure statement be required.
Commenters opposed the requirement to ask every client on each order if the purchase is being funded by a loan and if it is to deliver a written statement. It was thought to be onerous and impractical. One commenter stated: “We would not object to a new requirement to deliver a risk disclosure statement regarding leveraging upon the opening of a new account to ensure clients are aware about the risks associated with leveraging provided that this requirement applies to all dealers...” Commenters requested that dealers be reminded that leveraging is an important factor to consider in determining suitability and that investment advisors have a responsibility in this regard. Commenters requested that this disclosure not be applicable to situation involving dealer margin accounts. | The CSA are of the opinion that excessive leveraging is a concern and clients need to be informed of the risks of purchasing securities using leverage.
The CSA propose to require all registrants to provide this disclosure to a retail client when the client is opening an account, the registrant makes a recommendation to purchase securities by leverage or if the registrant is aware of the client’s intent to use leverage. Registrants are exempted from the requirement to provide this disclosure when the registrant has provided the disclosure within six months of the recommendation or the registrant is subject to leverage disclosure requirements of a recognized SRO. In addition, margin accounts have been exempted because comparable language is included in the opening account form. |
| Subsections 3.1
Prohibited Activities in a Branch Office | Deleted | In the opinion of one commenter, the provision of integrated financial services is a reality for all market participants, not just dealers in financial institution branches. Commenters stated that to require a client to physically shift locations in the branch of the financial institution to obtain different types of investment products is inefficient and not conducive to client needs. Having the client move may provide a facade of client protection, but, in their view, clients are better protected by disclosure made available by the dealer. | The CSA agree that the client protection can be achieved through the use of disclosure and the general rules regarding registrable activities. |
| Section 3.2
Opening of Accounts in a Branch Office | Deleted | One commenter submitted that the current practice that requires all forms to be reviewed and approved by registered personnel is sufficient. | The CSA are of the opinion that the general rules regarding who can conduct registrable activities are sufficient. |
| Section 3.3
Roving Registrants | Deleted
Proposed Policy 33-102CP Section 2.3 | Commenters questioned the rationale behind this provision. In their view, the restrictions are unnecessary and make it more difficult for financial institutions and related dealers to service clients in a cost effective manner relative to the needs of a particular market that may not support full-time staffing of a dealer branch premises. | The CSA have deleted this provision and has provided some guidance in section 2.3 of Proposed Policy 33-102CP regarding supervision. The restriction regarding how often someone may be in a branch to provide investment services to customers has been deleted. |
| Section 3.4
Registration not Required | Deleted | Commenters questioned the distinction between dealer branches operating in financial institutions from other dealers. While one stated that clients should only deal with someone who is registered for all business regarding securities or the opening of an account, most commenters stated that non registered personnel should be able to provide administrative and supporting services outlined in the proposal. | The CSA have deleted the list of non-registrable activities. It is up to the registrant to determine what activities should appropriately and legally be conducted by non-registered personnel. |
| Section 4.1
Dual Employment | Deleted | Commenters argued that the provision ignores the fact that inherent conflicts of interest exist in all salesperson/investor relationships and are not unique to dealers who have dually employed personnel. One commenter submitted that as long as a representative is a full-time employee of the | All local rules regarding dual/part-time employment apply to all registrants whether or not they are operating in a financial institution branch. In addition, the CSA note that the requirement to implement |
 | | financial institution group, and sells financial products full-time, she should be permitted to be dually employed.
Commenters also indicated that the provision would create problems for boards of directors by precluding financial institution directors from being on the board of a related securities dealer. | prudent business guidelines to address potential conflicts of interest is present in securities legislation and the CSA do not intend to develop model guidelines at this time.
Dual employment is also discussed in the CSA Notice 33-304 Distribution Structures Committee Position Paper. |
| Section 4.2
Compensation | Deleted | | This provision is covered in National Instrument 81-105 Mutual Fund Sales Practices |
| Section 4.3
Restriction on Dual Employment | Deleted | Commenters indicated that the restrictions on dual employment go far beyond any need to prevent customer confusion or conflicts.
Commenters stated that the lack of legislative harmony is unnecessary and burdensome and urged consistency between the requirements across the provinces. | All local rules regarding dual/part-time employment apply to all registrants whether or not they are operating in a financial institution branch. |
| Section 5.1
Referral Fees | Deleted | | This is dealt with in the CSA Notice 33-304 Distribution Structures Committee Position Paper, and, in some jurisdictions, by legislation. |
| Part 6
Confidential Client Information | Proposed NI 33-102,
Part 3 Proposed Policy 33-102CP Section 4.1 | Commenters acknowledged the importance the confidentiality of client information and respecting the client’s right to privacy. However, they expressed concern about that the tighter rules do not reflect business realities that have come about in compliance with the Principles of Regulation. Commenters stated that the integration of financial services distribution is a reality. Common back offices and centralized administrative services, which may use common systems to hold the records of a variety of financial products, | The CSA have retained the requirement that consent of the retail client must be acquired to disclose confidential information and has extended the requirement to all third parties, not just financial institutions. The requirement applies to retail clients at the time of opening of an account.
The CSA acknowledge that disclosure of confidential client |
| | are in place throughout the financial services industry. Client information is housed on financial institution computer systems and employees handling back office processing are employees of the financial institution and not the dealer. In the view of the commenters, making changes would be costly and take a considerable amount of time. Commenters stated that the new rules would not permit a dealer to decline to serve any client who refused to consent to the information sharing necessary to conduct administrative, processing, risk management and similar activities. and therefore, dealers would be forced to develop duplicative back offices and administrative units to accommodate these customers.
Commenters also requested that implied and oral consent be sufficient to comply with the requirement in certain circumstances. One commenter expressed concern about having the rules be more restrictive with respect to sharing information with financial institutions. | information is necessary for some products. Consequently, section 3.2 of the Proposed National Instrument provides that a registrant cannot make it a general condition of opening an account that the retail client consent to the dealer disclosing that client’s confidential information, but the dealer may require it if disclosure of the information is reasonably necessary to provide a specific product or service requested by the client. In the opinion of the CSA, this exemption addresses the concerns of commenters. |
| Section 7.1
Settling Securities Transactions | Proposed NI 33-102 Part 4 | Commenters indicated that advances in technology have led to products relying on and priced according to the efficiency of their technology linkages. The proposed rule is a significant change from the Principles of Regulation and will make it impossible for dealers to comply with respect of certain services which rely on emerging technologies. For example, Internet trading services usually require that the dealer be able to access a financial institution account of the client for purposes of settling trades. These accounts are typically with a related financial institution. | In response to comments made, the CSA have provided an exception that indicates that the registrant may require this method of settling if it is reasonably necessary to provide the service or product requested by the client. |
| Section 8.1
No Notice | Deleted | | The CSA have decided to delete the requirement to file networking notices from the regulations/policies of the jurisdictions. |
| 1997 PROPOSED COMPANION POLICY 33-102CP DISTRIBUTION OF SECURITIES AT FINANCIAL INSTITUTIONS | |||
| Part 1
Networking Notices | Deleted | | The CSA intend to take the necessary actions to repeal or amend the requirement to file networking notices. |
| Part 2
Branch Office | Deleted | | See comments under 1997 NI 33-102 section 3.1. |
| Part 3
Dual Employment | Deleted | | See comments under 1997 NI 33-102 section 4.1. |
| Part 4
Compliance and Supervisory Activities | Proposed Policy
33-102CP Section 2.3 | | It is the view of the CSA that the content of the deleted provisions are covered by existing securities legislation. Only section 4.5 regarding supervision has been maintained. |
| Part 5
Record Keeping | Proposed Policy
33-102CP Part 3 | | It is the view of the CSA that the content of the deleted provision is covered by existing securities legislation. Only section 5.2 regarding safeguards against access to records by third parties has been maintained. |
| Part 6
Reporting by Canadian Financial Institutions | Deleted | Commenters noted that this provision conflicts with confidentiality of client information provisions. | This issue is indirectly dealt with by the CSA Notice 33-304 Distribution Structures Committee Position Paper. |
| Part 7
Registrable Activities | Deleted | | See comments under 1997 NI 33-102 section 3.4. |
| Part 8
Referral fee Arrangements | Deleted | | See comments under 1997 NI 33-102 section 5.1. |
| 1997 PROPOSED NATIONAL INSTRUMENT 33-103 DISTRIBUTION NETWORKS | |||
| Part 1
Definitions | Deleted | | |
| Part 2
Toll-free lines | Deleted | Commenters questioned the need for multiple registration, as it would be difficult to ensure that each call is routed to correctly registered personnel. They argued that there is no policy reason to require residency requirements in addition to separate registration requirements. | The CSA are currently working on a mutual reliance/national registration database that would seek to harmonize and simplify residency and office requirements where services are provided to residents of more than one jurisdiction. |
| Part 3
Electronic Trades of Securities | Deleted | Commenters asked for clarity regarding all aspects of electronic trading. | Trading through electronic systems is not prohibited. The CSA remind registrants that all responsibilities, including maintenance of client confidentiality, suitability, are unchanged when using an electronic system. |
| Part 4
No Notice | Deleted | | This section is not necessary because the CSA intend to repeal or amend the requirement for filing networking notices. |
| 1997 PROPOSED NATIONAL INSTRUMENT 33-104 SELLING ARRANGEMENTS AND 1997 PROPOSED COMPANION POLICY 33-104CP SELLING ARRANGEMENTS | |||
| 1997 NI 33-104 and 1997 CP-33-104CP | Deleted
Proposed NI 33-102 Part 5 and Proposed Policy 33-102CP Part 4 | Commenters requested that the proposed instrument be limited to tied-selling type arrangements where there could be seen to be some form of coercive power. In addition, they requested provincial harmony with respect to selling arrangements. | The CSA have replaced these instruments with provisions that track the language prohibiting tied selling in National Instrument 81-105 Mutual Funds Sales Practices |
| PROPOSED NATIONAL POLICY 33-201 NETWORKING AND SELLING ARRANGEMENT NOTICES | |||
| 1997 National Policy 33-201 | Deleted | Commenters argued that because the market has evolved since the Principles of Regulation were adopted, they see little need for most networking arrangements to be filed or reviewed. | The CSA intend to take the necessary actions to repeal or amend the requirement to file networking notices. |