Securities Law

31-103 - Registration Requirements [NI Proposed - Lapsed]

Published Date: 2008-02-29
Document(s):

Concurrently Published:

Table of Contents

Part 1 - Definitions 1

1.1 Definitions 1

Part 2 - Categories of Registration and Permitted Activities 3

2.1 Dealer and Underwriter Categories 3
2.2 Exemption from Dealer Registration for Advisers 4
2.3 Adviser Categories 4
2.4 Exemption From Adviser Registration for Dealers without Discretionary Authority 5
2.5 Exemption from Adviser Registration for IDA Members with Discretionary Authority 5
2.6 Investment Fund Manager Category 5
2.7 Individual Categories 5
2.8 Associate Advising Representative - Approved Advising Only 5
2.9 Ultimate Designated Person 6
2.10 Chief Compliance Officer 6

Part 3 - SRO Membership 6

3.1 IDA Membership for Investment Dealers 6
3.2 MFDA Membership for Mutual Fund Dealers 6
3.3 Exceptions for SROMembers 7

Part 4 - Fit and Proper Requirements 8
Division 1: Proficiency Requirements 8

4.1 Definitions 8
4.2 U.S. Equivalency 9
4.3 Proficiency Principle 9
4.4 Time Limits on Examination Proficiency 9
4.5 Mutual Fund Dealer - Dealing Representative 9
4.6 Mutual Fund Dealer - Chief Compliance Officer 9
4.7 Scholarship Plan Dealer - Dealing Representative 10
4.8 Scholarship Plan Dealer - Chief Compliance Officer 10
4.9 Exempt Market Dealer - Dealing Representative 10
4.10 Exempt Market Dealer - Chief Compliance Officer 10
4.11 Portfolio Manager - Advising Representative 10
4.12 Portfolio Manager - Associate Advising Representative 11
4.13 Portfolio Manager - Chief Compliance Officer 11
4.14 Restricted Portfolio Manager - Chief Compliance Officer 12
4.15 Investment Fund Manager - Chief Compliance Officer 12
4.16 Grandfathered Registrants 12

Division 2: Solvency Requirements 13

4.17 Exemption for Certain Exempt Market Dealers 13
4.18 Capital Requirement 13
4.19 Report Capital Deficiency 13
4.20 Subordination Agreement - Notice Requirement 13
4.21 Insurance - Dealer 13
4.22 Insurance - Adviser 14
4.23 Insurance - Investment Fund Manager 15
4.24 Global Financial Institution Bonds 15
4.25 Notice of Change, Claim Or Cancellation 16

Division 3: Financial Records 16

4.26 Appointment of Auditor 16
4.27 Direction to Auditor 16
4.28 Delivering Financial Information - Dealer 16
4.29 Delivering Financial Information - Adviser 17
4.30 Delivering Financial Information - Investment Fund Manager 17
4.31 Content of Annual Financial Statements 18
4.32 Preparation of Financial Statements 18
4.33 Cooperation with Auditor 18
4.34 Financial Records for Certain Exempt Market Dealers 18

Part 5 - Conduct Rules 19
Division 1: Relationship with Clients 19

5.1 Exemption For Investment Fund Managers 19
5.2 Account Opening Documentation 19
5.3 Know-Your-Client 19
5.4 Providing Relationship Disclosure Information 20
5.5 Suitability 22
5.6 Sale or Assignment of Client Account 22
5.7 Margin  23
5.8 Disclosure When Recommending Use of Borrowed Money 23
5.9 Disclosure When Opening an Account in a Financial Institution 23

Division 2:  Client Assets 24

5.10 Holding Client Assets in Trust 24
5.11 Securities Subject to Safekeeping Agreement 24
5.12 Securities Not Subject to Safekeeping Agreement 24
5.13 Reduction of Debit Balances 25
5.14 Account Supervision 26

Division 3: Record-Keeping 26

5.15 Records - General Requirements 26
5.16 Records - Form, Accessibility and Retention 27

Division 4: Account Activity Reporting 28

5.17 Exemption for Investment Fund Managers and Exempt Market Dealers 28
5.18 Confirmation of Trade - General 28
5.19 Reporting Trades Otherwise 29
5.20 Semi-Annual Confirmations for Certain Automatic Plans 29
5.21 Confirmation of Trade - Exemption 30
5.22 Statements of Account and Portfolio 30

Division 5: Compliance 30

5.23 Compliance System 30
5.24 Ultimate Designated Person - Functions 31
5.25 Chief Compliance Officer - Functions 31
5.26 Access to Board or Partnership 31

Division 6: Complaint Handling 31

5.27 Exemption for Investment Fund Managers and Exempt Market Dealers 31
5.28 Complaints 32
5.29 Dispute Resolution Service 32
5.30 Policies and Procedures on Complaint Handling 32
5.31 Reporting to the Securities Regulatory Authority 32
5.32 Firms Registered in Québec 33

Division 7: Non-Resident Registrants 33

5.33 Notice to Clients 33
5.34 Compliance with Requests 33
5.35 Custody of Assets 33

Part 6 - Conflicts Of Interest 34
Division 1: General 34

6.1 Identifying and Responding to Conflicts of Interest 34
6.2 Prohibition on Certain Managed Account Transactions 34
6.3 Registrant Relationships 35
6.4 Issuer Disclosure Statement 35
6.5 Recommendations 36
6.6 Limitations on Advising 37
6.7 Allocating Investment Opportunities Fairly 37
6.8 Acquiring a Registered Firm's Securities or Assets 37
6.9 Settling Securities Transactions 38
6.10 Tied Selling 38

Division 2: Referral Arrangements 39

6.11 Definitions - Referral Arrangements 39
6.12 Permitted Referral Arrangements 39
6.13 Disclosing Referral Arrangements to Clients 39
6.14 Reasonable Diligence When Referring Clients 40
6.15 Application and Transition to Prior Referral Arrangements 40

Part 7 - Suspension and Revocation of Registration 41

7.1 Activities Requiring Registration are Prohibited 41
7.2 Suspension of Registered Firm 41
7.3 Suspension of IDA Approval 41
7.4 Suspension of MFDA Approval 41
7.5 Failure to Pay Fees 41
7.6 Termination of Employment, etc. 42
7.7 Revocation of Registration 42
7.8 Exception - Hearing 42

Part 8 - Exemptions From Registration 42
Division 1: General 42

8.1 Interpretation 42
8.2 Investment Fund Distributing through Dealer 42
8.3 Issuer Distributing through Registrant 42
8.4 Investment Fund Reinvestment 43
8.5 Additional Investment in Investment Funds 43
8.6 Private Investment Fund - Loan and Trust Pools 44
8.7 Private Investment Club - Investment Fund Manager Exemption 44
8.8 Mortgages 45
8.9 Personal Property Security Legislation 45
8.10 Variable Insurance Contract 45
8.11 Schedule Iii Banks and Cooperative Associations - Evidence of Deposit 46
8.12 Plan Administrators 46
8.13 Reinvestment Plan 46
8.14 Advising Generally 47
8.15 International Dealer 48
8.16 International Adviser 49
8.17 Sub-Advisers 50
8.18 Self-Directed Registered Educational Savings Plans 51
8.19 Specified Debt 51

Division 2: Mobility Exemptions 53

8.20 Definitions - Mobility Exemptions 53
8.21 Notice to Non-Principal Regulator 53
8.22 Notice of Change of Principal Regulator 54
8.23 Mobility Exemption - Registered Firm 54
8.24 Mobility Exemption - Registered Individual 54
8.25 Mobility Exemption Conditions 55

Part 9 - Exemption 55

9.1 Exemption 55

Part 10 - Transition 55

10.1 Change of Registration Categories - Firms 55
10.2 Change of Registration Categories - Individuals 56
10.3 Registration of Investment Fund Managers 56
10.4 Registration of Exempt Market Dealers 57
10.5 Registration of Ultimate Designated Persons 58
10.6 Registration of Chief Compliance Officers 58
10.7 Relationship Disclosure Information 59
10.8 Complaint Handling 59
10.9 Referral Arrangements 59
10.10 Capital Requirements 59
10.11 Insurance Requirements 60

Part 11 - Effective Date 60

11.1 Effective Date 60

Form 31-103F1 Calculation of Eexcess Working Capital 61

Form 31-103F2 Submission to Jurisdiction & Appointment of Agent for Service 65

Form 31-103F3 Notice of Principal Regulator 67

Appendix A -  Bonding and Insurance Clauses 68

Appendix B -  Subordination Agreement 69

Appendix C -  New Category Names - Firms 71

Appendix D -  New Category Names - Individuals 73

Appendix E -  Non-harmonized Capital Requirements 74

Appendix  F -  Non-harmonized Insurance Requirements 75