BCN 2001/54 - Adoption of National Instrument 33-102 Regulation of Certain Registrant Activities [BCN - Rescinded]
We (the Commission) and other members of the Canadian Securities Administrators ("CSA") have adopted National Instrument 33-102 Regulation of Certain Registrant Activities and Companion Policy 33-102CP, effective August 1, 2001. The text of the National Instrument (B.C. Reg. 174/2001) and Companion Policy are attached.
We published a draft of the National Instrument on July 21, 2000 (NIN 2000/32). On May 11, 2001, we gave advance notice that we expected to adopt the National Instrument (BCN 2001/32).
Substance and Purpose
The National Instrument and Companion Policy prescribe certain requirements and prohibitions for registrants in their dealings with retail clients.
In particular, they
- require a registrant to provide its retail clients with a written disclosure statement warning of the risk of using leverage to finance the purchase of securities,
- require a registrant to hold all information about its retail clients confidential except where required or permitted by law or by the bylaws of a self-regulatory organization or where the client consents to the disclosure of the information,
- prohibit a registrant from requiring a person or company to settle their account with the registrant through that person's or company's account at a Canadian financial institution as a condition of supplying products or services,
- prohibit tied selling,
- require a registrant that conducts securities-related activities in a financial institution to disclose that securities purchased are not insured or guaranteed, that they may fluctuate in value and that the registrant is a separate entity from the financial institution.
Networking Arrangement Notices
The securities regulatory authorities in British Columbia, Ontario, Manitoba, Québec and Newfoundland have revoked or repealed the requirement to file notices of networking arrangements in their respective jurisdictions. In British Columbia, we have done that by way of the consequential amendments. However, staff in our Capital Markets Regulation Division will continue to monitor arrangements that registrants have with savings institutions, insurers and other parties under which registrants sell the securities, goods or services of the savings institutions, insurers or other parties. For details about the specific steps taken by any other province or territory, please contact staff in those jurisdictions.
We made consequential amendments to the Securities Rules to ensure consistency with the direction of the National Instrument. The text is attached. Besides the repeal of section 84 of the Securities Rules, which deals with networking arrangements, the consequential amendments also
- amend the definition of "branch office";
- prescribe certain requirements concerning the disclosure of fees;
- remove references to "administration officer" where a registrant carries on business in a branch of a financial institution; and
- address the situation where salespersons work only part time for a registrant.
Other Documents Affected
We have rescinded
- NIN 87/67, that deals with leveraging to purchase mutual funds,
- NIN 88/40, NIN 88/48 and NIN 90/16, that govern the activities of dealers that carry on business in retail branches of Canadian financial institutions (the "Principles of Regulation"), and
We have also revoked BOR 93/4, that gives relief from the requirement to file a notice of a networking arrangement where the Principles of Regulation permit the activities contemplated under the arrangement.
Please refer questions to:
Senior Policy Advisor, Policy and Legislation
British Columbia Securities Commission
(800) 373-6393 (in B.C.)
July 18, 2001
Douglas M. Hyndman
Ref: NIN 87/67
This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at www.bcsc.bc.ca in the Commission Documents database or the Historical Documents database.
Consequential and Related Amendments to the Securities Rules
Relating to National Instrument 33-102 Regulation of Certain Registrant Activities
1 Section 1(1) of the Securities Rules, B.C. Reg. 194/97, is amended by repealing the definition of “branch office” and substituting the following:
“branch office”, in relation to a dealer or adviser, means a location, including a residence, where the dealer or adviser carries on any business as a dealer or adviser, either alone or through one or more individuals, but does not include
(a) the dealer’s or adviser’s chief place of business, or
(b) a location where the dealer or adviser carries on business for 50 or fewer days in any calendar year;.
2 Section 53(3) is repealed and the following substituted:
(3) Subject to subsection (4), the disclosure required under subsections (1) and (2) must
(a) be made
(i) in the circumstances described in subsection (1) (a), before the fee is accepted,
(ii) in the circumstances described in subsection (1) (b), before the fee is paid, or
(iii) in the circumstances described in subsection (2), at the time the purchase or sale is made or as soon as practicable after that time,
(b) be in writing, and
(i) the amount of the fee or, if not determinable, the method of calculating the fee,
(ii) to whom and by whom the fee is to be paid, and
(iii) the services for which the fee is payable.
3 Section 60 is amended
(a) in subsection (1) by striking out “and administration officer”, and
(b) in subsection (2) by striking out “If the compliance officer” and substituting “Except where otherwise permitted by the executive director, if the compliance officer”.
4 Section 66 is amended
(a) by repealing subsection (1) and substituting the following:
(1) Subject to subsections (2) and (3), a dealer or adviser that carries on business in a branch office must employ, with the approval of the executive director, a branch manager to ensure that the branch complies with the Act and the regulations.,
(b) in subsection (2) by striking out everything after “executive director is satisfied that a branch manager” and substituting “in another branch office is able to ensure that the branch office without a branch manager complies with the Act and the regulations.”, and
(c) the following subsection is added:
(3) The executive director may permit more than 4 registered individuals to carry on business in a branch office without a branch manager where one or more of the individuals carries on business on a part-time basis.
5 Section 84 is repealed.