BCN 2007/04 - Request for Comment Proposed National Instrument 31-103 Registration Requirements, Companion Policy 31-103CP Registration Requirements, related forms, and proposed BC Instrument 3*-5** Registration Requirements [BCN - Lapsed]
- 31-103 - Registration Requirements [NI Proposed - Lapsed]
- 31-103CP - Registration Requirements [CP Proposed - Lapsed]
- 33-109F1 - Notice of termination [F Proposed - Lapsed]
- 33-109F4 - Application for Registration of Individuals and Permitted Individuals [F Proposed - Lapsed]
- 33-109F6 - Application for registration as a dealer, adviser or investment fund manager for securities and/or derivatives [F Proposed - Lapsed]
In the attached notice, the Canadian Securities Administrators are publishing proposed National Instrument 31-103 Registration Requirements (national rule), Companion Policy 31-103CP Registration Requirements (CP), and proposed amendments to National Instrument 33-109 Registration Information (forms) for comment.
In this notice, the British Columbia Securities Commission (Commission) supplements the CSA notice. Under cover of this notice, the Commission is also publishing proposed BC Instrument 3*-5** Registration Requirements (local rule) and Appendix A Proposed consequential amendments for comment.
We suggest you first review the attached CSA Notice, which sets out in general terms the significant differences between today's registration regime and that proposed in the national rule. In this BC Notice, we provide British Columbia readers with a more detailed review of the changes from today's requirements in this province to those in the proposed national rule and local rules.
The CSA notice describes where you can send your comments and questions relating to the proposed national rule. All comments received by June 20, 2007 will be considered. You should send your comments on the proposed local rule by the same date.
Although the CSA Notice indicates that Appendix B (Ontario consequential amendments) is attached, we did not attach it to this publication as it is irrelevant in British Columbia.
We invite comment on all aspects of the proposed national rule, the CP, the forms, and the local rule. In addition, we have asked specific questions in shaded boxes throughout this notice for your consideration.
(View the PDF of BC Notice 2007/04 for the entire text)
Notice and Request for Comment
Proposed National Instrument 31-103 Registration Requirements,
Proposed Companion Policy 31-103CP Registration Requirements,
Proposed Amendments to National Instrument 33-109 Registration Information
February 20, 2007
Outline of Notice
OVERVIEW OF THE REGISTRATION REGIME 5
SUBSTANCE AND PURPOSE OF THE RULE 6
SUMMARY OF THE KEY FEATURES OF THE RULE 7
Part 1: Definitions and Interpretation 7
Part 2: Categories of Registration and Permitted Activities 7
Part 3: SRO Membership 13
Part 4: Fit and Proper Requirements 14
Part 5: Conduct Rules 16
Part 6: Conflicts 19
Part 7: Suspension and Revocation of Registration 20
Part 8: Information Sharing 21
Part 9: Exemptions from Registration 21
CHANGES TO REGULATORY FRAMEWORK IN QUÉBEC 23
PROPOSED FORMS UNDER MI 33-109 REGISTRATION INFORMATION 25
OTHER ISSUES 25
DESCRIPTION OF OSC PROPOSALS FOR LEGISLATIVE AMENDMENTS 26
HEAD OF AUTHORITY 26
ANTICIPATED COSTS AND BENEFITS 26
ALTERNATIVES CONSIDERED 27
UNPUBLISHED MATERIALS 27
REQUEST FOR COMMENTS 27
HOW TO PROVIDE YOUR COMMENTS 27
APPENDIX A - CONSEQUENTIAL AMENDMENTS TO NATIONAL INSTRUMENTS AND NATIONAL POLICIES 30
BC Instrument 3*-5**
(1) Terms defined in the Securities Act, the Securities Rules, NI 14-101 Definitions or NI 31-103 Registration Requirements, have the same meanings in this Instrument.
(2) "NI 31-103" means National Instrument 31-103 Registration Requirements.
2. Definition of dealing in securities
For the purposes of this Instrument and NI 31-103, "dealing in securities" includes
(a) trading securities or exchange contracts,
(b) acquiring securities or exchange contracts,
(c) underwriting securities or exchange contracts, and
(d) any act advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance of an activity described in paragraph (b).
3. Exemption for dealers that are not in the business of dealing in securities
The dealer registration requirement does not apply to a person who is not in the business of dealing in securities.
4. Exemption from underwriter registration
The underwriter registration requirement does not apply to
(a) a registered investment dealer,
(b) a registered exempt market dealer, or
(c) a dealing representative at (a) or (b).
5. Fair dealing with clients
(1) A registrant must deal fairly, honestly and in good faith with the clients of the registrant.
(2) A registered
(a) dealing representative
(b) advising representative
(c) associate advising representative
must deal fairly, honestly and in good faith with the clients of the dealer or adviser.
6. Information about registrant available on client's request
(1) On request, a registrant must provide a client or prospective client with information about
(a) the registrant's registration status, including category of registration and any restrictions on or conditions of registration,
(b) any current administrative proceeding by a securities or exchange contracts regulatory authority, or by a self regulatory body or exchange, against the registrant in any jurisdiction,
(c) if the registrant is a registered individual, the registrant's education
(d) if the registrant is a dealer or adviser, a copy of the registrant's most recently prepared annual financial statements
(e) if the registrant is a dealer or adviser, a current list of the dealer's or adviser's partners, directors and senior officers,
(f) any registration or licensing under the Financial Institutions Act or comparable legislation in another jurisdiction.
(2) A registered dealer and a registered adviser must inform its clients annually that the information referred to in subsection (1) is available to clients on request.
7. Subordination agreement
A registered firm must not borrow in order to maintain excess working capital unless the registered firm and the lender enter into a subordination agreement that subordinates the lender's claims to those of all current and future general creditors.
8. Compensation or contingency trust fund
(1) A registered firm must participate in and contribute to a compensation fund or contingency trust fund established by a
(a) self regulatory body recognized under section 24 of the Act, or
(b) trust company.
(2) The executive director may exempt a registered firm from the requirement in subsection (1).
9. Trade confirmations - exchange contracts
(1) If a registered dealer purchases or sells an exchange contract for a client, the trade confirmation that the dealer sends to the client must include, in addition to that information required under section 5.21 of NI 31-103,
(a) the delivery month and year, and
(b) the expiry date.
(2) If a registered dealer purchases or sells an exchange contract that is an option for a client, the trade confirmation that the dealer sends to the client must include, in addition to that information required under subsection (1),
(a) the price of the initial and offsetting transactions,
(b) the dates of the initial and offsetting transactions,
(c) the gross profit or loss on the transactions, and
(d) the net profit or loss on the transactions.
10. Executive director's conditions of registration
(1) The executive director may
(a) vary, if the executive director considers that to do so would not be prejudicial to the public interest, or
(b) add to, if the executive director considers that to do so would be in the public interest,
the provisions that apply to a registrant or a group of registrants in Parts 4, 5, and 6 of NI 31-103.
(2) The executive director must not vary or add to the provisions respecting registration under subsection (1) without giving the registrant or group of registrants an opportunity to be heard.