Securities Law

32-519 - Exemption for Mutual Fund Dealers Association Members from Obligation to Provide Relationship Disclosure [BCI - Rescinded]

Published Date: 2010-09-10
Effective Date: 2010-09-28
Rescinded Date: 2011-09-28
Document(s):

Concurrently Published:

The British Columbia Securities Commission, considering that to do so would not be prejudicial to the public interest, orders that effective September 28, 2010, BC Instrument 32-519 entitled “Exemption for Mutual Fund Dealers Association Members from Obligation to Provide Relationship Disclosure” is made.

 

September 10, 2010

 


Brenda M. Leong
Chair
 ________________________________________________________________  
(This part is for administrative purposes only and is not part of the Order)

Authority under which Order is made:
Act and sections:- Securities Act, section 48(1)
 

BC Instrument 32-519

Exemption for Mutual Fund Dealers Association Members from Obligation to Provide Relationship Disclosure

Order under section 48(1) of the Securities Act

Definitions

1. Unless otherwise defined in this decision or the context otherwise requires, terms used in this decision that are defined in National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103) or National Instrument 14-101 Definitions have the same meaning.

Background

2. Under section 14.2(1) [Relationship disclosure information] of NI 31-103, a registered firm must deliver to a client all information that a reasonable investor would consider important about the client’s relationship with the registrant.

3. Pursuant to section 16.14 of NI 31-103, section 14.2 of NI 31-103 does not apply until September 28, 2010 to a firm that was registered on September 28, 2009.

4. The MFDA is currently finalizing its proposal on relationship disclosure information (“MFDA CRM proposal”), published on July 26, 2010 in MFDA Bulletin 0444-P - Proposed amendments to MFDA Rule 2.2 (Client accounts), Policy No. 2 Minimum Standards for account supervision, Rule 2.8 (Client communications) and Rules 5.3 (Client reporting).

5. The purpose of the MFDA CRM proposal is to set out detailed requirements to assist registered firms who are MFDA members (“Affected Firms”) to comply with the general principle in section 14.2(1) of NI 31-103.

6. It is anticipated that the MFDA CRM proposal will be finalized and come into force within one year, but not by September 28, 2010.

7. Absent relief, Affected Firms could incur unwarranted costs in first developing detailed relationship disclosure information to comply with section 14.2(1) of NI 31-103 but then potentially having to change that disclosure to comply with the MFDA CRM proposal when it comes into force.

8.  The Commission considers that limited relief from the requirements in subsection 14.2(1) would not be prejudicial to the public interest.

Order

9. Section 14.2(1) of NI 31-103 does not apply to an Affected Firm, notwithstanding its registration in other categories of registration, until the earliest of September 28, 2011 or the date on which the MFDA CRM proposal comes into force.