33-103 - Distribution Networks [Proposed NI - Lapsed]
Distribution Networks1 2
1 This proposed Instrument is derived from The Principles of Regulation Re: Distribution of Mutual Funds by Financial Institutions. The Instrument is, however, not restricted to mutual fund sales, nor trades by financial institutions. It is expected that this Instrument will be adopted 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.
2 A national definition rule has been adopted as National Instrument 14-101 Definitions. It contains definitions of certain terms used in more than one national instrument. National Instrument 14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of the applicable jurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning given to it in the statute relating to securities of that jurisdiction. National Instrument 14-101 also provides that a provision in a national instrument that specifically refers by name to a jurisdiction, other than the local jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.
PART 1 DEFINITION
1.1 Definition- In this Instrument
"networking arrangement" has the meaning ascribed to that term in securities legislation; and
"networking notice requirement" means the requirement under securities legislation3
3 The term "securities legislation" is defined in National Instrument 14-101 Definitions as meaning the particular statute and legislative instruments of the local jurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, rules and rulings and orders relating to securities in the local jurisdiction.
that a registrant give written notice before entering into a networking arrangement4 5.
4 The term "securities legislation" is defined in National Instrument 14-101 Definitions as meaning the particular statute and legislative instruments of the local jurisdiction set out in an appendix to that instrument and will generally include the statute, regulations and, in some cases, rules and rulings and orders relating to securities in the local jurisdiction.
5 It is proposed that this definition be moved to National Instrument 14-101 Definitions as it used in more than one national instrument.
PART 2 TOLL-FREE LINES
2.1 Toll-free Lines - A registered dealer may operate a toll-free telephone line if each call for a securities transaction or advice on a securities transaction is dealt with by one of the following individuals who is registered under the Canadian securities legislation in the jurisdiction from which the call originates:6
6 In some jurisdictions, a person may be required to be resident in the jurisdiction as a condition to registration.
(i) a director of the dealer;
(ii) an officer of the dealer;
(iii) a partner of the dealer;
(iv) a salesperson of the dealer.
PART 3 ELECTRONIC TRADES OF SECURITIES
3.1 (1) A registered dealer may trade securities with a client through an automated teller machine or any other electronic system if
(a) automated teller machine or other electronic system
(i) ensures access to the client's account is limited to that client,
(ii) does not accept transactions outside the suitability range established under paragraph (b),
(iii) refers the client's order to purchase or sell a security outside the suitability range established under paragraph (b) to a registered director, partner, officer or salesperson of the dealer, and
(iv) is not used to open a new account; and
(b) the dealer establishes and updates the suitability range for the client.
(2) A registered dealer may obtain account opening information from a potential client through an automated teller machine or other electronic system referred to in subsection (1).
PART 4 NO NOTICE
4.1 No Notice - A registrant is not required to comply with the networking notice requirement for a networking arrangement established and conducted in compliance with this Instrument.7
7 This provision is derived from blanket rulings and orders issued by some Canadian securities regulatory authorities and administrative practices of some Canadian securities regulatory authorities.
PART 5 EXEMPTION
(1) The regulator8
8 The term "regulator" is defined in National Instrument 14-101 Definitions as meaning, in a jurisdiction, the official described in an appendix to that instrument.
or the securities regulatory authority may grant an exemption to this Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.
(2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.