BCN 2008/24 - Notice of Conditions of Registration for Investment Dealers that Trade in the U.S. Over-the-Counter Markets [BCN - Lapsed]
- 33-705 - Conditions of Registration for Investment Dealers that Trade in the U.S. Over-the-Counter Markets [BCIN - Lapsed]
The Commission intends to impose conditions of registration under section 36 of the Securities Act on investment dealers that trade in the U.S. over-the-counter markets.
Significant changes to the conditions as published
We published proposed conditions of registration for comment on October 29, 2007. We received nine comment letters. A summary of those comments and our responses to them is attached.
As a result of comments received, we have revised the proposed conditions as follows:
- the proposed conditions as published would have required dealers to monitor only physical deliveries of securities of OTC issuers into client accounts. The revised conditions will require dealers to monitor electronic deliveries as well;
- the proposed conditions as published would have prohibited dealers from trading in securities of OTC issuers without first establishing the identity of the beneficial owner. The revised conditions will prohibit only sales of securities of OTC issuers in those circumstances;
- the proposed conditions as published would have required the dealers' Ultimate Designated Person to be responsible for managing compliance with the conditions. Under the revised conditions, dealers can choose any director or officer to fulfill this responsibility;
- the revised conditions will not apply to dealers whose trading in securities of OTC issuers is solely incidental to serving clients who do not ordinarily trade in those securities.
We are also publishing guidance. The guidance explains how the Commission will apply and interpret the conditions.
Opportunity to be heard
All affected investment dealers have the right to be heard before the Executive Director imposes the conditions. Under sections 36(2) of the Securities Act and 17(2) of the Securities Rules, the Executive Director must not restrict or impose a condition on registration, or vary or add to the provisions on registration, without giving the registrant an opportunity to be heard.
We have written to each affected dealer today, advising them of the proposal to impose conditions and of their right to be heard before the conditions are imposed. A dealer that wishes to exercise its right to be heard must provide written submissions on or before June 12, 2008 to the Director, Capital Markets Regulation by mail or by e-mail to firstname.lastname@example.org.
If you have questions about the conditions, please direct them to Tony Wong, Senior Legal Counsel (604)899-6764 or email@example.com. If you are calling from outside the Lower Mainland, you may call Mr. Wong toll-free at 1-800-373-6393.
May 13, 2008
Brenda M. Leong
Ref: Conditions of Registration - Investment Dealers that Trade in the U.S. Over-the-Counter Markets
BC Interpretation Note 33-705
Summary of Comments and Responses - Investment Dealers that Trade in the U.S. Over-the-Counter Markets
This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website atwww.bcsc.bc.ca in the Policies & Instruments or Historical Policies & Instruments sections of the website.