Notice of BCSC Non-Objection to Proposed Amendments to MFDA Rule 2.2 (Client Accounts), Policy No. 2 Minimum Standards for Account Supervision, Rule 2.8 (Client Communications) and Rule 5.3 (Client Reporting)
View PDF of Client Accounts (Rule 2.2) (Amendments to the Current Rule)
View PDF of Client Reporting (Rule 5.3) (Amendments to the Current Rule)
View PDF of MFDA Policy No. 2 - Minimum Standards for Account Supervision
View PDF of Rates of Return (Rule 2.8.3) (Amendments to the Current Rule)
View PDF of Summary of Public Comments Respecting Proposed Amendments to MFDA Rule 2.2 (Client Accounts), Policy No. 2 Minimum Standards for Account Supervision, Rule 2.8 (Client Communications) and Rule 5.3 (Client Accounts) and Responses of the MFDA
View PDF of Summary of Public Comments Respecting Proposed Amendments to MFDA Rule 5.3 (Client Reporting) and MFDA Rule 2.8 (Client Communications)
View PDF of Summary of Public Comments Respecting Proposed Amendments to MFDA Rule 2.2 (Client Accounts) and MFDA Policy No. 2 Minimum Standards for Account Supervision
On June 29, 2010, the BCSC and the MFDA's other recognizing regulators did not object to, not disapprove or approve , as the case may be, the MFDA's proposed amendments to MFDA Rule 2.2 (Client Accounts), Policy No. 2 Minimum Standards for Account Supervision, Rule 2.8 (Client Communications) and Rule 5.3 (Client Reporting).
The proposed amendments will:
- require that investors are provided with certain fundamental information at the time an account is opened, which will help to ensure that clients are aware of the role and responsibilities of the member and what to expect as far as services and costs;
- clarify the duty of members and approved persons to assess the suitability of investments in each client account when various triggering events occur;
- clarify the responsibilities of members and approved persons in discharging their suitability obligations;
- require members to provide certain information to clients on an annual basis with respect to the performance of the client's account at the member; and
- clarify the member's supervisory requirements regarding client communications that disclose a rate of return.
Staff of the recognizing regulators reminds all MFDA members that the MFDA's account performance reporting proposals are only a first step towards developing comprehensive performance reporting requirements and that the Canadian Securities Administrators are currently working together with self-regulatory organizations to develop harmonized requirements for enhanced cost disclosure and performance reporting requirements.
The BCSC initially published the amendments for comment on its website on June 13, 2008 for a 90-day comment period. The MFDA received sixteen comment letters in respect of the proposed amendments to Rule 2.2 and Policy No. 2. Eleven commenters also made submissions in respect of the proposed amendments to Rule 2.8 and Rule 5.3.
Subsequent to the initial publication of the proposed amendments, the BCSC published a revised proposal for public comment on April 24, 2009 for a second 90-day comment period. The MFDA received ten comment letters during the second comment period.
The MFDA summarized the comments it received on the proposal and provided responses. We attach copies of the summary and MFDA responses, as well as blacklined copies of Rules 2.2, 2.8, 5.3 and Policy No. 2 showing the changes to the current rules.
July 16, 2010
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1The Alberta Securities Commission, Saskatchewan Financial Services Commission, Manitoba Securities Commission, Ontario Securities Commission, New Brunswick Securities Commission and Nova Scotia Securities Commission.
2Non-objection, non-disapproval and approval are the different ways in which the recognizing regulators express their decisions after reviewing proposed MFDA rules.
Ref: Request for Comments: MFDA Rule 2.2 (Client Accounts), Policy No. 2 Minimum Standards for Account Supervision, Rule 2.8 (Client Communications) and Rule 5.3 (Client Reporting)
This Notice may refer to other documents. You can find these documents at the B.C. Securities Commission public website at www.bcsc.bc.ca in the section Securities Law & Policy: Policies & Instruments.