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Securities Law

NIN 98/09 - Proposed National Instrument 33-101 and Proposed Rescission of British Columbia Securities Commission Local Policy Statement 3-33 Administration of Self-Directed RRSPs, RESPs and RRIFs by Dealers [NIN - Rescinded]

Published Date: 1998-02-13
Effective Date: 1998-02-11

The Commission, together with the other members of the Canadian Securities Administrators ("CSA"), is publishing for comment the text of proposed National Instrument 33-101, which will replace British Columbia Securities Commission Local Policy Statement 3-33 ("LPS 3-33") and Ontario Securities Commission Policy Statement No. 4.3 ("OSC Policy 4.3"). The National Instrument contains footnotes that are not part of the proposed National Instrument, but which have been included to provide background and explanation.

Concurrent with the adoption of the proposed National Instrument, the British Columbia Securities Commission will rescind LPS 3-33 and the Ontario Securities Commission will rescind OSC Policy 4.3.

Substance and Purpose of Proposed National Instrument

The proposed National Instrument imposes conditions to protect clients’ assets when dealers act as administrators of self-directed registered retirement savings plans ("RRSPs"), registered education savings plans ("RESPs") and registered retirement income funds ("RRIFs").

The proposed National Instrument is an initiative of the CSA and is expected to be adopted or made as a rule in British Columbia, Alberta, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the CSA. The proposed National Instrument implements, in part, the recommendation of the CSA Task Force on Operational Efficiencies that Canadian securities regulatory authorities increase the coordination of regulation, including the standardization of requirements.

Summary of Proposed National Instrument

The proposed National Instrument prohibits dealers from acting as administrators, unless the specified conditions set out in the National Instrument are met. It also explicitly applies to all categories of dealers equally, rather than being limited to only brokers (as is the case with LPS 3-33) or to just brokers and investment dealers (as per OSC Policy 4.3). The proposed National Instrument also expands the scope of investment products covered to include RESPs and RRIFs - in addition to RRSPs. The proposed National Instrument removes the requirement that was set out in both LPS 3-33 and in OSC Policy 4.3 for RRSP securities to be segregated separately from non-RRSP securities.

The proposed National Instrument imports the requirements of the Joint Regulatory Financial Questionnaire and Report (the "JRFQR"), which has been adopted by The Alberta Stock Exchange, The Montreal Exchange, The Toronto Stock Exchange, the Vancouver Stock Exchange and the Investment Dealers Association of Canada. The JRFQR prescribes who is an acceptable trustee and what is an acceptable securities location. The proposed National Instrument requires that the trustee remain primarily liable to planholders even though the dealer is acting as administrator. The administrative functions of the dealer which the dealer must undertake, including disclosure, recordkeeping, maintaining control over plan securities and safekeeping, are prescribed in the proposed National Instrument. The proposed National Instrument prescribes timing for delivery of cash balances from plan accounts to the trustee and prohibits agreements to set-off. Finally, the proposed National Instrument requires that other necessary regulatory approvals be received by the dealer and others prior to the dealer becoming an administrator of a plan.

Anticipated Costs and Benefits

The CSA are of the view that investors who maintain plan accounts with dealers will benefit from the additional protection obtained as a result of the stricter rules imposed by the National Instrument as to who may hold property and where the property must be held.

The costs associated with the proposed National Instrument are anticipated to be the cost of registrants establishing and following the procedures required by the proposed National Instrument. The introduction of the concepts of "acceptable financial institution" and "acceptable securities location" may result in fewer eligible trustees for plans that are administered by dealers. The extension of the application of the proposed National Instrument to all categories of dealers and to dealers acting as administrators of RESPs and RRIFs will increase costs to those dealers in complying with the conditions imposed by the National Instrument.

In the view of the CSA, the benefits of additional investor protection associated with the proposed National Instrument outweigh the incremental costs which it imposes.


Interested parties are invited to make written submissions with respect to the proposed National Instrument. Submissions received by May 13, 1998 will be considered.

Submissions, in duplicate, should be addressed to all of the Canadian securities regulatory authorities listed below in care of the Ontario Securities Commission

British Columbia Securities Commission
Alberta Securities Commission
Saskatchewan Securities Commission
The Manitoba Securities Commission
Ontario Securities Commission
Office of the Administrator, New Brunswick
Registrar of Securities, Prince Edward Island
Nova Scotia Securities Commission
Securities Commission of Newfoundland
Securities Registry, Government of the Northwest Territories
Registrar of Securities, Government of the Yukon Territory

c/o Daniel P. Iggers, Secretary
Ontario Securities Commission
20 Queen Street West
Suite 800, Box 55
Toronto, Ontario M5H 3S8

Submissions should also be addressed to the Commission des valeurs mobilières du Québec as follows

Claude St. Pierre, Secretary
Commission des valeurs mobilières du Québec
Tour de la Bourse
C.P. 246, 17th Floor
Montréal, Québec H4Z 1G3

A diskette containing the submissions (in DOS or Windows format, preferably WordPerfect) should also be submitted. As securities legislation in certain provinces requires that a summary of written comments received during the comment period be published, confidentiality of submissions received cannot be maintained.

Questions may be referred to any of the following:

Ross P. McLennan
Director, Registration
British Columbia Securities Commission
(604) 899-6685

David Sheridan
Legal Counsel
Alberta Securities Commission
(403) 297-2630

Barbara Shourounis
Saskatchewan Securities Commission
(306) 787-5645

David Cheop
The Manitoba Securities Commission
(204) 945-2548

Nancy Ross
Legal Advisor
Registration, Market Operations Branch
Ontario Securities Commission
(416) 593-8154

Renée Piette
Policy Advisor
Commission des valeurs mobilières du Quebéc
(514) 873-5009

Elaine Anne MacGregor
Deputy Director, Capital Markets
Nova Scotia Securities Commission
(902) 424-7768

DATED at Vancouver, British Columbia, on February 11, 1998

Douglas M. Hyndman