BCN 2009/29 - Notice of Amended Conditions of Registration for Investment Dealers with a BC Office that Trade in the U.S. Over-the-Counter Markets [BCN - Lapsed]
- 33-705 - Conditions of Registration for Investment Dealers with a BC Office that Trade in the U.S. Over-the-Counter Markets [BCIN - Rescinded]
On June 13, 2008, the BCSC imposed conditions of registration on all investment dealers that trade in securities of OTC issuers through an office in British Columbia (old conditions). 1 The conditions were an important part of the Commission’s response to abusive practices in U.S. over-the-counter markets. They increased dealers’ accountability for OTC trading activities.
On October 28, 2009, the BCSC imposed new conditions that are effective only in British Columbia. As a result, Multilateral Instrument 11-102 Passport System does not affect dealers’ offices outside British Columbia.
Differences between the old conditions and new conditions
The old conditions and new conditions are substantially similar. However, we have ·
- clarified certain areas,
- improved drafting and clarified the Form B based on comments from dealers and Commission staff, and
- revised language to reflect National Instrument 31-103 Registration Requirements and Exemptions.
One noteworthy difference between the old conditions and new conditions relates to the designated person or individual. In the old conditions, "designated person" was a term defined in IDA By-law No. 1 (see old guidance in BC Interpretation Note 33-705). However, the Investment Industry Regulatory Organization of Canada removed that definition from its Dealer Member Rules. As a result, the new conditions specify who can act as the designated individual, which is substantially similar to the IDA’s old "designated person" definition.
We also updated the guidance in BCIN 33-705 to communicate our responses to frequently asked questions. The additional or new guidance sets out:
- introducing and carrying broker obligations,
- how the new conditions apply to derivatives transactions,
- how to calculate commissions for fee-based accounts, and
- how to treat commissions reporting for salaried dealing representatives.
Please direct any questions about the new conditions or the revised guidance to
Senior Legal Counsel
Capital Markets Regulation
October 30, 2009
Brenda M. Leong
1 See BC Notices 2007/33 and 2008/24 and BC Interpretation Note 33-705 for information about the old conditions, and BC Notice 2007/24 for information about the problem of abusive conduct in the US OTC markets.
National Instrument 31-103 Registration Requirements and Exemptions
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 section Securities Law & Policy: Policies & Instruments.