Securities Law & Instruments

PDF Version

PDF Version



AMENDED NATIONAL INSTRUMENT 31-103,
NATIONAL INSTRUMENT 33-109 AND OSC RULE 33-506



Table of Contents

CSA Notice of Amendments - National Instrument 31-103 Registration Requirements and Exemptions, National Instrument 33-109 Registration Information and related Policies and Forms

Appendix A Summary of changes to the Instrument

Appendix B Summary of comments and responses on the June 2010 proposal

Appendix C Adoption of the Instrument

Appendix D Amending instrument to NI 31-103

Appendix E Amending instrument to NI 33-109

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations

Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations

National Instrument 33-109 Registration Information

Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals

Form 33-109F2 Change or Surrender of Individual Categories

Form 33-109F3 Business Locations other than Head Office

Form 33-109F4 Registration of Individuals and Review of Permitted Individuals

Form 33-109F5 Change of Registration Information

Form 33-109F6 Firm Registration

Form 33-109F7 Reinstatement of Registered Individuals and Permitted Individuals

Companion Policy 33-109CP Registration Information

OSC Notice of Amendments - Ontario Securities Commission Rule 33-506 (Commodity Futures Act) Registration Information

Amending instrument to Ontario Securities Commission Rule 33-506 (Commodity Futures Act) Registration Information

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (blacklined to current law)

Companion Policy 31-103CP Registration Requirements s, Exemptions and Ongoing Registrant Obligations (blacklined to current law)

National Instrument 33-109 Registration Information (blacklined to current law)

Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals (blacklined to current law)

Form 33-109F2 Change or Surrender of Individual Categories (blacklined to current law)

Form 33-109F3 Business Locations other than Head Office (blacklined to current law)

Form 33-109F4 Registration of Individuals and Review of Permitted Individuals (blacklined to current law)

Form 33-109F5 Change of Registration Information (blacklined to current law)

Form 33-109F6 Firm Registration (blacklined to current law)

Form 33-109F7 Reinstatement of Registered Individuals and Permitted Individuals (blacklined to current law)

Companion Policy 33-109CP Registration Information (blacklined to current law)

 

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

 

CSA Notice of Amendments - National Instrument 31-103 Registration Requirements and Exemptions, National Instrument 33-109 Registration Information and related Policies and Forms

NOTICE OF AMENDMENTS TO NATIONAL INSTRUMENT 31-103

REGISTRATION REQUIREMENTS AND EXEMPTIONS AND

COMPANION POLICY 31-103CP REGISTRATION REQUIREMENTS AND EXEMPTIONS

AND

AMENDMENTS TO NATIONAL INSTRUMENT 33-109

REGISTRATION INFORMATION AND

COMPANION POLICY 33-109CP REGISTRATION INFORMATION

Introduction

The Canadian Securities Administrators (the CSA or we) are implementing amendments (the Amendments) to National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103), Companion Policy 31-103CP Registration Requirements and Exemptions (31-103CP) and the forms under NI 31-103 as well as to National Instrument 33-109 Registration Information (NI 33-109), Companion Policy 33-109CP Registration Information (31-109CP) and related forms under NI 33-109. The amendments are subject to approvals, including ministerial approvals.

NI 31-103 came into force on September 28, 2009 and introduced a new national registration regime that is harmonized, streamlined and modernized. We indicated in the July 17, 2009 notice of publication that we would propose amendments to NI 31-103, 31-103CP, NI 33-109 and 33-109CP together with related forms (collectively, the Instrument) if investor protection, market efficiency or other regulatory concerns arose. On June 25, 2010 we published proposed amendments for comment (the June 2010 Proposal) following our monitoring of the implementation of the Instrument and our continuing dialogue with stakeholders about questions and concerns that have arisen in respect of their practical experience working with the Instrument. We are now implementing these amendments.

We think the effect of these amendments, which range from technical adjustments to more substantive matters, will enhance investor protection and improve the day-to-day operation of the Instrument for both industry and regulators. In addition we believe that these changes will provide greater clarity of our intentions.

Comments on the June 2010 Proposal

We received 32 comment letters on the June 2010 Proposal, and thank everyone who provided comments. Copies of the comment letters are posted on the following websites:

www.lautorite.qc.ca
www.osc.gov.on.ca

We made changes to certain of the amendments which were proposed in the June 2010 Proposal. We also made various minor changes to NI 31-103 to standardize drafting in similar provisions, in order to give better effect to our original intent. We concluded that these changes do not require the CSA to publish the Instrument for another comment period.

You can find:

• a description of the key changes we made to the Instrument in Appendix A of this Notice; and

• a summary of the comments we received on the June 2010 Proposal, together with our responses, in Appendix B of this Notice.

Adoption of the Amendments

Provided all necessary approvals are obtained, including ministerial approvals, the Amendments will come into force on July 11, 2011. Additional information about the adoption processes for some jurisdictions is provided in Appendix C of this Notice.

List of appendices

This Notice also contains the following appendices:

• Appendix A Summary of changes to the Instrument;

• Appendix B Summary of comments and responses on the June 2010 Proposal;

• Appendix C Adoption of the Instrument;

• Appendix D Amending instrument to NI 31-103; and

• Appendix E Amending instrument to NI 33-109.

A blackline version of the Instrument reflecting changes to the Instrument is available on some CSA websites.

Where to find more information

The Instrument is available on websites of CSA members, including:

www.lautorite.qc.ca
www.albertasecurities.com
www.bcsc.bc.ca
www.gov.ns.ca/nssc
www.nbsc-cvmnb.ca
www.osc.gov.on.ca
www.sfsc.gov.sk.ca

Questions

Please refer your questions to any of the following CSA staff:

Lindy Bremner
Senior Legal Counsel, Capital Markets Regulation
British Columbia Securities Commission
Tel: 604-899-6678
1-800-373-6393
lbremner@bcsc.bc.ca
 
Navdeep Gill
Legal Counsel, Market Regulation
Alberta Securities Commission
Tel: 403-355-9043
navdeep.gill@asc.ca
 
Curtis Brezinski
Acting Deputy Director, Legal and Registration
Saskatchewan Financial Services Commission
Tel: 306-787-5876
curtis.brezinski@gov.sk.ca
 
Chris Besko
Legal Counsel, Deputy Director
The Manitoba Securities Commission
Tel. 204-945-2561
Toll Free (Manitoba only) 1-800-655-5244
chris.besko@gov.mb.ca
 
Leigh-Ann Ronen
Legal Counsel, Compliance and Registrant Regulation
Ontario Securities Commission
Tel: 416-204-8954
lronen@osc.gov.on.ca
 
Sophie Jean
Analyste expert en réglementation -- pratiques de distribution
Autorité des marchés financiers
Tel: 514-395-0337, ext. 4786
Toll-free: 1-877-525-0337
sophie.jean@lautorite.qc.ca
 
Brian W. Murphy
Deputy Director, Capital Markets
Nova Scotia Securities Commission
Tel: 902-424-4592
murphybw@gov.ns.ca
 
Jason L. Alcorn
Legal Counsel
New Brunswick Securities Commission
Tel: 506-643-7857
Jason.Alcorn@gnb.ca
 
Katharine Tummon
Superintendent of Securities
Prince Edward Island Securities Office
Tel: 902-368-4542
kptummon@gov.pe.ca
 
Craig Whalen
Manager of Licensing, Registration and Compliance
Office of the Superintendent of Securities
Government of Newfoundland and Labrador
Tel: 709-729-5661
cwhalen@gov.nl.ca
 
Louis Arki
Director, Legal Registries
Department of Justice, Government of Nunavut
Tel: 867-975-6587
larki@gov.nu.ca
 
Donn MacDougall
Deputy Superintendent, Legal & Enforcement
Office of the Superintendent of Securities
Government of the Northwest Territories
Tel: 867-920-8984
donald.macdougall@gov.nt.ca
 
Frederik J. Pretorius
Manager Corporate Affairs (C-6)
Dept of Community Services
Government of Yukon
Tel: 867-667-5225
Fred.Pretorius@gov.yk.ca

April 15, 2011

 

Appendix A Summary of changes to the Instrument

APPENDIX A

SUMMARY OF CHANGES TO THE INSTRUMENT

This appendix describes the key changes we made to National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103 or the Rule), Companion Policy 31-103CP Registration Requirements and Exemptions (31-103CP or the Companion Policy) and National Instrument 33-109 Registration Information (NI 33-109), Companion Policy 33-109CP Registration Information (33-109CP) as well as the forms under NI 31-103 and NI 33-109 (the Forms) (collectively, the Amendments). Provided all necessary approvals are obtained, the Amendments will come into force on July 11, 2011.

This appendix contains the following sections:

1. Title of NI 31-103 and 31-103CP

2 Definitions

3 Clarity of disclosure to clients

4. Responsibility of the firm for the conduct of the individuals it sponsors

5. Business trigger for trading and advising

6. Mobility exemption

7. Registration requirements for individuals

8. Categories of registration for firms

9. Exemptions from the requirement to register

10. Membership in a self-regulatory organization (SRO)

11. Internal control and systems

12. Financial condition

13. Client relationships

14. Handling client accounts

15. Transition

16. Form 31-103F1 Calculation of Excess Working Capital

17. Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service

18. Appendix B Subordination Agreement

19. Amendments to NI 33-109

20. Amendments to NI 33-109 forms

In this appendix, we reference the sections of the Rule except where otherwise indicated. We refer to the amendments published for comment on June 25, 2010 as the June 2010 Proposal.

1. TITLE OF NI 31-103 AND 31-103CP

We added ongoing registrant obligations to the title of NI 31-103 and 31-103CP. The title is now Registration Requirements, Exemptions and Ongoing Registrant Obligations. We believe, as stated in the notice published on June 25, 2010, that this change will better reflect the breadth and scope of NI 31-103 and 31-103CP, which includes initial registration and requirements for registrants on an ongoing basis.

2. DEFINITIONS

We clarified paragraph (d) of the permitted client definition in section 1.1. We also added a definition of Chief Compliance Officers Qualifying Exam as this exam is now an alternative to the PDO Exam for chief compliance officers.

3. CLARITY OF DISCLOSURE TO CLIENTS

There are a number of client disclosure requirements in the Instrument. We consolidated our guidance on clear and meaningful disclosure to clients throughout the Companion Policy in a general principle in section 1.1 of 31-103CP, setting out our expectation that registered firms present information to clients in a clear and meaningful manner in order to ensure clients understand the information presented. This requirement is based on the obligation of all registrants to act fairly, honestly and in good faith when dealing with clients.

4. RESPONSIBILITY OF THE FIRM FOR THE CONDUCT OF THE INDIVIDUALS IT SPONSORS

We proposed in June 2010 to add guidance, in section 3.4 of the Companion Policy, on the firm's responsibility to ensure compliance with ongoing requirements. This includes firms ensuring that their registered individuals are proficient. We now provide more general guidance on the firm's responsibility regarding their registered individuals in section 1.3 of 31-103CP, which sets out our view that a registered firm is responsible for the conduct of their registered individuals.

The registered firm

• must undertake due diligence before sponsoring an individual to be registered to act on its behalf; and

• has an ongoing obligation to monitor and supervise its registered individuals in an effective manner.

5. BUSINESS TRIGGER FOR TRADING AND ADVISING

We clarified, in section 1.3 of 31-103CP (under the headingFactors in determining a business purpose), the guidance on incidental activities in respect of mergers and acquisitions specialists. We expect that if these specialists also engage in capital raising from prospective investors (including private placements), they will need to consider whether they are in the business of trading and require registration.

6. MOBILITY EXEMPTION

We codified in section 2.2 of the Companion Policy the guidance that we previously published in the Frequently Asked Questions (FAQ) published on February 5, 2010.

7. REGISTRATION REQUIREMENTS FOR INDIVIDUALS

(a) Proficiency requirements (sections 3.1 to 3.14)

i. Time limits on examination requirements (section 3.3)

Further to our June 2010 Proposal, we removed the requirement in section 3.3(2)(a) that an individual be registered for any 12 month period during the 36-month period prior to applying for registration in order to qualify for the exemption from the time limitations placed on examinations. Instead, section 3.3(2)(a) now requires an individual to have been registered in the same category in any jurisdiction of Canada at any time during the 36-month period before the date of his or her application for registration.

We clarified that periods of suspension will not be included for purposes of calculating the period of time a person has been registered in respect of the time limits for the validity of the examinations. We also added guidance on the 36-month time limit on examinations in section 3.3 of 31-103CP.

We amended section 3.3 to delete the reference to the examinations formerly provided in section 45 of Québec Policy Q-9 Dealers, Advisers and Representatives, since this is already covered in the grandfathering provisions in section 16.10(1) of NI 31-103.

ii. Proficiency -- initial and ongoing (section 3.4)

We amended section 3.4 to provide that the proficiency principle for dealing, advising and associate advising representatives includes understanding the key features of the securities that are recommended by the individual. Guidance has been added in 31-103CP to indicate that the proficiency principle applies notwithstanding any suitability exemption, including the exemption in section 13.3(4) in respect of permitted clients.

Guidance has also been added to confirm that it is the responsibility of a registered firm to ensure that their registered individuals are proficient at all times.

iii. Recognition of the Chief Compliance Officers Qualifying Exam (sections 3.6, 3.8, 3.10, 3.13 and 3.14)

The Chief Compliance Officers Qualifying Exam is now an alternative to the PDO Exam for chief compliance officers.

iv. Removal of the requirement to pass the Canadian Securities Course Exam for holders of the CFA Charter (sections 3.13 and 3.14)

The requirement to pass the Canadian Securities Course Exam has been removed from section 3.13 and 3.14, in cases where the individual has earned the CFA Charter.

v. Alternative proficiency for representatives of mutual fund dealers and exempt market dealers (sections 3.5 and 3.9)

We amended sections 3.5 and 3.9 to provide the following alternative proficiency for representatives of mutual fund dealers and exempt market dealers: the individual will meet the proficiency requirement if he or she has earned a CFA Charter and has 12 months of relevant securities industry experience in the 36-month period before applying for registration.

vi. Codification of the transitioned proficiencies

The proficiencies which are the object of the transition provisions in sections 16.9(2) and 16.10(1) have been codified in Part 3.

vii. Additional proficiency guidance

Guidance has been added in 31-103CP to confirm that the proficiency requirements in Part 3 do not apply to approved persons of the Investment Industry Regulatory Organization of Canada (IIROC) because these individuals are required to meet the proficiency requirements mandated by the IIROC rules. We also updated Appendix C - Proficiency requirements of 31-103CP for individuals acting on behalf of a registered firm to reflect the changes to the proficiency requirements of the Rule (as outlined above).

(b) Review by the CSA of alternative proficiencies

We stated in the July 17, 2009 notice of publication that "the CSA would assess new examinations that are submitted for approval. We will review the Rule on a periodic basis and codify the recognition of additional examinations as they are approved by the CSA". Due to an ever increasing number of policy initiatives and other priorities requiring substantial staff involvement, the recognition of additional examinations or the inclusion of alternative or local proficiency requirements in the Rule are not anticipated this year. The CSA will reconsider this decision next year, taking into consideration its other priorities.

(c) Restrictions on acting for another registered firm (section 4.1)

In the June 2010 Proposal we included in section 4.1 of NI 31-103 a new sub-paragraph (1)(b), which would prohibit an advising, associate advising and dealing representative from being registered with another registered firm. We have retained this provision. However, in order to assist firms in filing exemptive relief applications, we have amended section 4.1 so that a registered firm, as opposed to an individual, now has the obligation to ensure that an individual who acts on its behalf does not, at the same time, act as (a) an officer, partner or director of another registered firm that is not an affiliate of the first-mentioned registered firm, or (b) a dealing, advising or associate advising representative of another registered firm.

We included a grandfathering provision for individuals who were dually registered before the coming into force of the amendments to section 4.1. Guidance has been added to 31-103CP indicating the factors that will be taken into account when reviewing exemption applications.

8. CATEGORIES OF REGISTRATION FOR FIRMS

(a) Mutual fund dealers (section 7.1)

We repealed the exceptions for Québec and British Columbia in section 7.1(2)(b)(ii) and 7.1(3), in order to harmonize with the other CSA jurisdictions. All mutual fund dealers in Canada are now authorized to act as dealers in respect of the securities listed in section 7.1(2)(b).

(b) Investment fund managers (section 7.3 of the Companion Policy)

We added guidance in 31-103CP to address the situation where the board of directors or the trustee(s) of a fund are directing the business, operations or affairs of an investment fund. In these situations, the fund itself may be considered the investment fund manager and therefore required to register in the investment fund manager category.

We also added guidance on the registration of investment fund managers in the context of fund complexes and groups to clarify that we expect exemption applications to be made by investment fund managers that have delegated the management of the fund function to a registered affiliate. We included guidance on the factors we will consider in respect of these exemption applications. We repealed the guidance on limited partnerships in view of this new guidance.

9. EXEMPTIONS FROM THE REQUIREMENT TO REGISTER

(a) Exemptions from dealer registration

i. Trades through or to a registered dealer (section 8.5)

We amended the Companion Policy to provide additional examples in order to clarify further the use of this exemption.

ii. Investment fund trades by adviser to managed accounts (section 8.6)

We eliminated the restriction in this exemption relating to non-prospectus qualified investment funds. The Rule now provides an exemption from dealer registration for an adviser trading in the securities of an investment fund to managed accounts of the adviser's clients, if the adviser acts as the adviser and investment fund manager of the investment fund.

iii. Plan administrator (8.16)

We deleted the definition of "control person" in section 8.16 since that expression is defined in securities legislation.

iv. International dealer (section 8.18)

We amended section 8.18 to:

• include an express restriction on the use of this exemption, which is only available if the permitted client is a Canadian permitted client, as defined in section 8.18;

• change the prescribed contents of the notice to clients required under section 8.18(4) as was proposed in the June 2010 Proposal, and restate the requirement to give annual notice to the regulator under section 8.18(5); and

• add a new subsection 8.18(7) to provide an adviser registration exemption for the person relying on the section 8.18 dealer registration exemption. This exemption is restricted to advice provided to the client in connection with trading activity permitted under section 8.18, and does not extend to a managed account of a client.

We had proposed to repeal, in the June 2010 Proposal, subsection 8.18(6) that provides that in Ontario, the obligation to provide the yearly notice to the regulator does not apply to a person or company that complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees. We are not making this change.

Subsections 8.18(6) and 8.26(6), as they appeared in the June 2010 Proposal, have been removed. Upon further consideration we have decided not to proceed with this change.

(b) Exemptions from adviser registration

International adviser (section 8.26)

We amended section 8.26 to mirror those changes made to the international dealer exemption (section 8.18) in respect of

• the restriction on the use of the exemption, which is only available if the permitted client is a Canadian permitted client , as defined in section 8.26; this definition is identical to the one in section 8.18, except that it excludes paragraph (d) of the definition of "permitted client" in section 1.1;

• the contents of the notice to clients;

• the annual notice to the regulator;

• maintaining subsection 8.26(6) as it appears in the current law in respect of an unregistered exempt international firm's ability to meet the yearly notice requirement to the regulator in Ontario by complying with certain filing and fee payment requirements; and

• the removal of subsection 8.26(6) as it appeared in the June 2010 Proposal.

We also clarified in paragraph 8.26(4)(d) our intent that the adviser's aggregate consolidated gross revenue is to be determined as at the end of its most recent financial year-end.

Finally, we included guidance in the Companion Policy on what we consider to be permissible incidental advice on Canadian securities by international advisers relying upon the exemption under section 8.26.

10. MEMBERSHIP IN A SELF-REGULATORY ORGANIZATION (SRO)

We reorganized the drafting of the exemptions in Part 9 for:

• IIROC members that are also registered as investment fund managers; and

• members of the Mutual Fund Dealers Association of Canada (MFDA) that are also registered as exempt market dealers, scholarship plan dealers or investment fund managers.

The Rule now has two distinct sections, section 9.3 and 9.4, which distinguish the exemptions that are available on the basis of whether or not the member of IIROC or the MFDA is registered in another category. This clarifies our intent with respect to the exemptions for SRO members.

We added an exemption from section 13.12 for MFDA members. This change was made on the basis that the MFDA has a member rule prohibiting lending to clients except in very limited circumstances.

Finally, we added an exemption from section 13.15 for SRO members. This change was made on the basis that the SROs have their own rules on complaint handling. We remind registrants in Québec that to the extent they deal with a client in Québec, they must comply with sections 168.1.1 to 168.1.3 of the Securities Act (Québec) in all cases.

We may publish further amendments to the Instrument for comment in the near term.

11. INTERNAL CONTROL AND SYSTEMS

(a) Elements of an effective compliance system (section 11.1 of the Companion Policy)

We included in the Companion Policy the enhanced guidance on internal controls that was proposed in the June 2010 Proposal.

(b) Designating an ultimate designated person (UDP) (section 11.2)

We amended section 11.2 of the Rule by adding in section 11.2(2)(a) that if the firm does not have a chief executive officer (CEO), the firm may designate, as its UDP, an individual acting in a capacity similar to a CEO. We also amended section 11.2(2)(c) to clarify our intent that the officer in charge of a division of the firm may be designated as the firm's UDP, but only to the extent that the firm has significant other business activities. Usually, a firm will have only one UDP.

We included in the Companion Policy the enhanced guidance on the UDP designation that was proposed in the June 2010 Proposal.

(c) Record-keeping (section 11.5 of the Companion Policy)

We clarified the guidance in 31-103CP to the effect that we expect registered firms to maintain notes of communications with clients, whether oral or written, that could have an impact on the client's account or the client's relationship with the firm. We remind registered firms that while we do not expect them to save every voicemail or e-mail, or to record all telephone conversations with clients, we do expect registered firms to maintain records of all communications relating to orders received from their clients.

(d) Registrant acquiring a registered firm's securities or assets (section 11.9) and Registered firm whose securities are acquired (section 11.10)

We deleted the reference to amalgamations, mergers, arrangements, reorganizations or treasury issues in section 11.9(3)(a) and section 11.10(3) and the reference to listed securities in section 11.9(3)(b) set out in the June 2010 Proposal as these references may be unduly restrictive.

In addition, we have amended section 11.9(3)(a) and section 11.10(3) to clarify our intent in respect of when we expect to receive a notice under these provisions.

Section 11.10 of 31-103CP now includes guidance on our expectations as to the timing of the prior notice of a proposed acquisition. We expect this notice to be sent as soon as the registered firm knows or has reason to believe such a transaction is going to take place.

12. FINANCIAL CONDITION

(a) Capital requirements (section 12.1)

We added a new subsection (5) in section 12.1 in order to provide that a registered firm that is a member of IIROC and that is also registered as an investment fund manager is not required to comply with the requirements of section 12.1 if certain conditions relating to the registered firm's minimum capital and the filing of the IIROC Form 1 Joint Regulatory Financial Questionnaire and Report are met. The registered firm will be required to file this form with the regulator in addition to filing with IIROC.

Following the same policy rationale, we added a new subsection (6) to section 12.1 in order to provide that a mutual fund dealer that is a member of the MFDA and that is also registered as an exempt market dealer, scholarship plan dealer or investment fund manager is not required to comply with the requirements of section 12.1 if certain conditions relating to the registered firm's minimum capital and the filing of the MFDA Form 1MFDA Financial Questionnaire and Report are met. The registered firm will be required to file this form with the regulator in addition to filing with the MFDA.

We also added guidance in section 12.1 of the Companion Policy on the exclusion of related party debt from a firm's working capital, which can only occur when the firm and the lender enter into a subordination agreement and file this agreement with the regulator.

(b) Subordination agreements (section 12.2)

We added guidance in section 12.2 of the Companion Policy to clarify the requirements relating to subordination agreements. In addition, we lengthened the delivery requirement from 5 days to 10 days.

(c) Insurance (sections 12.3, 12.4 and 12.5)

We did not make the amendments to sections 12.3(2), 12.4(3) and 12.5 as set out in the June 2010 Proposal but we added guidance in the Companion Policy on

• the coverage limits; and

• the fact that insurance requirements are not cumulative for firms registered in several categories.

We confirm, in response to several inquiries received, that firms only need to maintain insurance coverage for the highest amount required.

(d) Delivering financial information (sections 12.12 and 12.14)

We made changes to sections 12.12 and 12.14, which correlate with the changes made to the capital requirements for registered firms that are SRO members and are also registered in other categories of registration. These changes will allow these firms to file their respective SRO form with the regulator instead of filing the Form 31-103F1.

(e) Transition to IFRS -- financial years beginning January 1, 2011

The Instrument was amended on January 1, 2011 in order to update the accounting terms and references in the Instrument to reflect the fact that, for financial years beginning on or after January 1, 2011, there has been a changeover to International Financial Reporting Standards (IFRS) in Canadian Generally Accepted Accounting Principles (Canadian GAAP) for publicly accountable enterprises.

We remind registrants that the amendments that came into force on January 1, 2011 only apply to periods relating to financial years beginning on or after January 1, 2011. Absent an exemption, registrants delivering financial statements and interim financial information relating to financial years beginning before January 1, 2011 will be required to comply with the versions of NI 31-103 and NI 33-109 in force prior to January 1, 2011, which contain the existing Canadian GAAP terms and phrases.

Foreign registrants should consult National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) as acceptable accounting principles other than IFRS may apply instead.

13. CLIENT RELATIONSHIPS

(a) Know your client (section 13.2)

We have increased the 10% threshold in section 13.2(3)(b)(i) to a 25% threshold, which is consistent with omnibus/blanket orders issued by each of the members of the CSA on November 5, 2010. We provide guidance in the Companion Policy on how the obligations in sections 13.2(3) should be met.

We amended section 13.2(7) to codify the parallel blanket/omnibus orders issued by each of the CSA members on November 5, 2010 providing relief from the requirement in section 13.2(2)(b) to take reasonable steps to establish whether a client is an insider of a reporting issuer or any other issuer whose securities are publicly traded. Section 13.2(2)(b) does not apply to a registrant in respect of clients for which the registrant trades only the securities referred to in sections 7.1(2)(b) and 7.1(2)(c), namely mutual fund and scholarship plan securities.

(b) Restrictions on certain managed account transactions (section 13.5)

We did not amend section 13.5 as we had indicated in the June 2010 Proposal. Specifically, we did not delete the word registered before the word adviser, and we did not expand the provision to apply to IIROC members that conduct advising activities. Although we believe that these provisions should apply to all advisers without distinction as to whether or not they are IIROC members, we did not make these changes in view of the comments we received from IIROC members which indicated that there may be significant unintended consequences in respect of trades made from IIROC members' inventory accounts. We are reviewing the regime applicable to IIROC members and we may publish proposed amendments for comments in the future.

To address these issues, we added guidance in the Companion Policy with respect to trades made from the inventory account of registered dealers that are members of IIROC and that conduct advising activities (IIROC advisers) to managed accounts. We expect IIROC advisers to have policies and procedures that sufficiently mitigate the conflicts of interest inherent in such transactions.

We also provided guidance in 31-103CP regarding activities that are not prohibited by section 13.5 and clarified the consent requirements.

(c) Disclosure when recommending related or connected securities (section 13.6)

We clarified paragraph (b) by also referring to a mutual fund, scholarship plan, educational plan or educational trust that is managed, as an investment fund manager, by an affiliate of the registered firm.

(d) Referral arrangements (sections 13.7 to 13.11)

We amended sections 13.8, 13.9 and 13.10 in accordance with the June 2010 Proposal, in order to

• clarify section 13.8 by stating that a registered firm, or a registered individual whose registration is sponsored by the registered firm, must not participate in a referral arrangement with another person or company unless certain conditions are met;

• clarify the contractual agreement requirements: our intent is that only the registered firm is required to be a party to a written agreement;

• provide in paragraph (b) of section 13.8 that the registered firm is required to record all referral fees, but deleted the words "on its records" in favour of additional guidance on keeping records of referral fees;

• in section 13.9, provide that the registered firm, and not the individual registrant, is held to the due diligence requirement with respect of the qualifications of the person or company to whom the referral is made; and

• in section 13.10 of the Rule we replaced the words referral arrangement with agreement to better reflect our intent.

We amended the guidance on referral arrangements in the Companion Policy to indicate that registered firms are responsible for monitoring and supervising all of their referral arrangements. We also added new guidance indicating our view that the receipt of an unexpected gift of appreciation would not fall within the scope of a referral arrangement.

(e) Lending to clients (section 13.12)

We added Companion Policy guidance confirming that direct lending to clients (margin) is reserved to IIROC members and addressing the application of this provision to certain leveraged products.

(f) Disclosure when recommending the use of borrowed money (section 13.13)

We have removed an exception from the disclosure requirements required when a registrant recommends the use of borrowed money to purchase securities. The exception only applied to members of IIROC and the MFDA. Members of IIROC and the MFDA are now fully exempt from these requirements as their rules adequately cover the same regulatory risks.

(g) Complaint handling (section 13.15 of the Companion Policy)

We adopted the guidance that was proposed in the June 2010 Proposal. The guidance covers what the firm's complaint handling policies and procedures should include, recommendations as to the manner of responding to verbal complaints and complaints in writing, as well as the timeframe within which the complaint should be dealt with.

(h) Dispute resolution service (section 13.16)

We did not make the changes we proposed to section 13.16 to list the specific matters that require independent dispute resolution, following the comments we received on this proposal. We therefore maintained the existing requirement to provide such services for any trading or advising activity.

The transition period for the coming into force, for all registrants except those registered in Québec, of section 13.16 has been extended from September 28, 2011 to September 28, 2012 in section 16.16. The extension of this transition period will allow the CSA to further consider this regime in light of a number of questions we have received. Considering the importance of this provision in respect of investor protection, we may publish proposed amendments for comments in the future.

We remind firms registered in Québec that this transition period is not applicable to them because they have been, and continue to be, subject to sections 168.1.1 to 168.1.3 of the Securities Act (Québec) since 2002.

14. HANDLING CLIENT ACCOUNTS

(a) Relationship disclosure information (section 14.2)

Section 14.2(2)(j) has been amended to reflect the fact that not all registered firms are currently required to comply with section 13.16 as they may be relying on the transition period (as amended in section 16.16). This transition period does not apply to firms registered in Québec and to firms registered after September 28, 2009.

(b) Notice to clients by non-resident registrants (section 14.5)

We amended section 14.5 by adding an exception to the requirement to provide the risk notice to clients in a jurisdiction if the firm has its head office in Canada and is registered in the local jurisdiction. In response to comments received, the Rule no longer refers to a physical place of business.

We further amended section 14.5 in order to make the contents of the risk notice to clients consistent with the notice which must be given by dealers and advisers relying on the exemptions provided in sections 8.18 and 8.26 respectively. Firms are not required to send a new notice as amended to existing clients, since the amendments are not retroactive.

(c) Content and delivery of trade confirmation (section 14.12)

We amended section 14.12 as follows:

• section 14.12(1) now allows the registered dealer to deliver trade confirmations to a registered adviser acting for the client if the client consents in writing;

• section 14.12(3) now expands the exceptions to the requirement in section 14.12(1)(h) to a security of a mutual fund that is established and managed, as an investment fund manager, by the registered dealer or an affiliate of the dealer, where the names of the dealer and the fund are sufficiently similar to indicate that they are affiliated or related;

• new subsection (5) requires a registered investment fund manager to send a trade confirmation to a security holder when the investment fund manager executes a redemption order received directly from the security holder; and

• new subsection (6) clarifies that we did not intend for subsection (5) to apply to an adviser, that is also an investment fund manager, relying on the dealer registration exemption in section 8.6.

We included additional guidance in the Companion Policy in respect of a registered dealer outsourcing the delivery of trade confirmations to an investment fund manager.

(d) Confirmations for certain automatic plans (section 14.13)

We removed the condition to send a trade confirmation semi-annually to a client where the registered dealer relies on the exemption from sending a trade confirmation as the client already receives a quarterly or annual account statement showing the same information under section 14.14.

(e) Account statements (section 14.14)

We amended section 14.14 to provide that

• a mutual fund dealer (upon certain conditions) need not send an account statement on a monthly basis (section 14.14(2.1));

• where there is no dealer of record, the investment fund manager is expected to send account statements at least once every 12 months (section 14.14(3.1)); and

• a scholarship plan dealer (upon certain conditions) need not send quarterly account statements (section 14.14(6)).

We included additional guidance in the Companion Policy in respect of a registered firm's ability to outsource the delivery of account statements and the valuation of securities by third-party pricing providers for the purpose of account statements.

We did not make the proposed amendments to section 14.14 of the Rule that would have required that securities be valued using fair value. Section 14.14 continues to refer to market value.

15. TRANSITION

We extended certain transition periods to September 28, 2012:

• temporary exemption for Canadian investment fund manager registered in its principal jurisdiction (section 16.5);

• temporary exemption for foreign investment fund managers (section 16.6); and

• complaint handling in respect of dispute resolution services (section 16.16), except in Québec.

16. FORM 31-103F1 Calculation of Excess Working Capital

We made technical adjustments to this form, including

• terminology changes in accordance with NI 52-107 that reflect Canada's changeover to IFRS. This includes adding a definition of fair value for the purpose of valuing securities in the Form 31-103F1 which aligns with a registrant's requirement to value securities in financial statements in accordance with Canadian GAAP applicable to publicly accountable enterprises under NI 52-107;

• clarification that the insurance deductible refers to the insurance maintained in accordance with Part 12;

• addition of new guidance notes to the form;

• revising the list of designated exchanges; and

• inclusion of new margin rates for mortgages. These new margin rates apply to all mortgages not in default. If a firm is registered in Ontario, or in any jurisdiction of Canada and Ontario, these new margin rates apply only to mortgages insured under the National Housing Act (Canada) and conventional first mortgages. If a firm is registered in any jurisdiction in Canada except Ontario, the new margin rates and insurance requirements apply to all mortgages.

17. FORM 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service

We included a requirement to provide the international firm's NRD number, if applicable, and contact information for their chief compliance officer.

18. APPENDIX B Subordination Agreement

To add clarity, we amended section 4 of the subordination agreement to provide a 10-day prior notice to the regulator of full or partial repayment of the loan, in accordance with section 12.2. We remind registrants that related party debt must be excluded from a firm's working capital on Form 31-103F1, unless the firm and the lender have executed a subordination agreement.

19. AMENDMENTS TO NI 33-109

(a) Definition of permitted individuals

We clarified the definition of permitted individual in section 1.1 of NI 33-109 and added guidance in the Companion Policy indicating that a permitted individual may or may not be a registered individual.

(b) Timelines for filing

We amended all provisions setting out the filing timelines of notices. Where a notice was previously required to be filed in 7 days it is now required to be filed within 10 days.

(c) Voluntary resignation

We added the words "resigned voluntarily" in section 2.3(2)(b) to correlate with Form 33-109F7 Reinstatement of Registered Individuals and Permitted Individuals.

(d) Termination of employment

Further to our June 2010 Proposal, we revised section 4.2(1)(b) of NI 33-109 so that the information in item 5 [Details about the termination] must be completed in all cases of termination, unless the termination was due to the death of the individual.

(e) Use of forms

We added additional guidance in 33-109CP regarding the use of the forms.

20. AMENDMENTS TO NI 33-109 FORMS

(a) Technical changes and updating contact information

We made certain technical changes to the following forms to update contact information and add clarity:

• Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals

• Form 33-109F3 Business Locations Other than Head Office

• Form 33-109F5 Change of Registration Information

• Form 33-109F7 Reinstatement of Registered Individuals and Permitted Individuals

(b) Form 33-109F2 Change or Surrender of Individual Categories

In addition to technical changes, updating contact information and clarifications, we amended Form 33-109F2 in order to add a question on relevant securities industry experience in Item 4 -- Adding categories.

(c) Form 33-109F4 Registration of Individuals and Review of Permitted Individuals (Form 33-109F4)

In addition to technical changes, updating contact information and clarifications, we amended Form 33-109F4 in order to:

• add a question on relevant securities industry experience in Item 8 -- Proficiency;

• add questions relative to the CFA Charter and the CIM designation in Schedule E -- Proficiency (Item 8);

• add questions on relevant securities industry experience in Schedule F -- Proficiency (Items 8.3 and 8.4); and

• add a question in Schedule G -- Current employment, other business activities, officer positions held and directorships (Item 10) with respect to the name of the person at the sponsoring firm who has reviewed and approved the multiple employment or business related activities or proposed business related activities.

We added guidance in 33-109CP on Item 18 Agent for service to clarify that there is no distinct form which is prescribed under NI 33-109 for the appointment of an agent for service for use by individuals, and that the form used by the registered firm constitutes an acceptable format to the regulator.

(d) Form 33-109F6 Firm Registration (Form 33-109F6)

In addition to technical changes, updating contact information and clarifications, we amended Form 33-109F6 in order to:

• clarify what we mean by "jurisdiction", "jurisdiction of Canada" and "foreign jurisdiction" and that the questions in Part 4 -- Registration History and Part 7 -- Regulatory Action are to be answered in respect of any jurisdiction of Canada and any foreign jurisdiction. In other parts of Form 33-109F6, references to "jurisdictions" or "jurisdiction of Canada" refer to all provinces and territories of Canada;

• clarify the audited financial statement requirements in section 5.13; and

• state that the information provided in Part 7 -- Regulatory Action and Part 8 -- Legal Action is limited to the last 7 years, which is consistent with the regulator's administrative practice with respect to the Form 33-109F6 as required under Part 6.1 of NI 33-109 (namely, the transitional F6). We remind registrants that, as outlined in Part 9 -- Certification, all information must be provided to the best of the applicant's knowledge and after reasonable inquiry.

 

Appendix B Summary of Comments and Responses on the June 2010 Proposal

APPENDIX B

SUMMARY OF COMMENTS AND RESPONSES ON THE JUNE 2010 PROPOSAL

This appendix summarizes the written public comments we received on the proposed amendments to National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103 or the Rule), Companion Policy 31-103CP Registration Requirements and Exemptions (31-103CP or the Companion Policy), the forms under NI 31-103 and National Instrument 33-109 Registration Information (NI 33-109), Companion Policy 33-109CP Registration Information (33-109CP) as well as the forms under NI 33-109 (the Forms) (collectively, the Instrument) as published on June 25, 2010 (the June 2010 Proposal). It also sets out our responses to those comments.

This appendix contains the following sections:

1. Introduction

2. Responses to comments received on the Rule and the Companion Policy

3. Responses to comments received on NI 33-109 and related Forms

Please refer to Appendix A Summary of changes to the Instrument for the details of the changes we made in response to comments.

1. Introduction

(a) Drafting suggestions

We received a number of drafting comments on the Instrument. While we incorporated many of these suggestions, this document does not include a summary of the drafting changes we made.

(b) Categories of comments and single response

In this document, we consolidated and summarized the comments and our responses by the general theme of the comments.

(c) Comments beyond the scope of the June 2010 Proposal

We do not provide a response to comments received beyond the scope of the June 2010 Proposal. We provided responses to certain of these comments in the context of prior consultations. In other cases, we are continuing our work and may publish notices or proposed amendments for comment in the future.

2. Responses to comments received on the Rule and the Companion Policy

(a) IFRS fair value for the valuation of securities

We received several comments on proposed section 1.4, which would have required that registrants determine the fair value of securities in accordance with IFRS. The commenters indicated that there would be a significant operational impact on registrants in respect of this requirement. We did not make the proposed amendments.

We however added a definition of fair value in Form 31-103F1 Calculation of Excess Working Capital (Form 31-103F1) for valuing securities. The use of fair value in the Form 31-103F1 is in line with a registrant's requirement to value securities in financial statements in accordance with Canadian GAAP applicable to publicly accountable enterprises under the new National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107). This alignment is necessary as a registrant's financial statements form the basis of the information reported on Form 31-103F1.

In response to comments indicating that National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) already provides an appropriate method for calculating the net asset value of certain mutual fund securities, the valuation of these securities in the Form 31-103F1 is based on the net asset value (NAV) as determined in accordance with NI 81-106.

(b) Proficiency requirements

i. Time limits on examination requirements

One commenter expressed the view that section 3.3 should be included in Part 9 of NI 31-103 as a provision from which IIROC members would be excepted, since the commenter is of the view that section 3.3 conflicts with IIROC Rule 2900. We disagree. Part 3 of NI 31-103 does not apply to IIROC approved persons, and therefore there is no need to exempt IIROC approved persons from the time limits on examination requirements. This is stated in the Companion Policy.

 

We received a comment agreeing with the proposed amendments to exclude holders of the CFA Charter and the CIM designation from the requirement of retaking their courses, however, the commenter suggested that this should be conditional upon their designation continuing to be "current" with either the CFA Institute (for the CFA designation) or CSI Global Education Inc. (for the CIM designation), and that the individual be in good standing with the organization that has granted the designation.

In response to this comment, we

• amended 31-103CP to clarify that we may consider the revocation, or other limitation on the use, of the CFA Charter or the CIM designation in the assessment of continued suitability for registration; and

• amended Item 8.1 Course or examination/designation information and other education in Schedule E -- Proficiency of Form 33-109F4 Application for registration of individuals and review of permitted individuals by adding questions on the CFA Charter and the CIM designation to verify that these designations are in good standing.

We remind registered individuals in 31-103CP that they are required to notify us of any change in the status of the CFA Charter or the CIM designation within 10 days of the change, by submitting Form 33-109F5 Change of Registration Information in accordance with National Instrument 31-102 National Registration Database.

ii. Proficiency principle

We received several comments on the inclusion in section 3.4 of the requirement to understand the structure, features and risks of each security that is recommended by the individual registrant. The commenters expressed the view that the proposed addition to section 3.4, which is a principle-based provision

• is redundant since the requirement to understand the structure, features and risks of each security (also known as the "know-your-product" requirement) already forms part of the requirement to perform registrable activities competently;

• would be more appropriately characterized as a suitability requirement; and

• appears to be already incorporated as a suitability requirement in section 13.3 of NI 31-103.

We amended section 3.4 to provide that the proficiency principle includes the requirement to understand the structure, features and risks of each security that is recommended by the individual. We do not believe this proficiency principle is redundant with the know-your-product requirement that forms part of the suitability obligations.

We added guidance in 31-103CP to indicate that the proficiency principle, including knowledge and understanding of the securities that are recommended by the individual, applies notwithstanding the suitability exemption in respect of permitted clients in section 13.3(4).

iii. Chief Compliance Officers Qualifying Exam

We received a comment to the effect that the Chief Compliance Officers Qualifying Exam is an adequate proficiency requirement which should be available for chief compliance officers of exempt market dealers and investment fund managers. The Chief Compliance Officers Qualifying Exam is an IIROC approved exam. We amended sections of Part 3 of the Rule so that this alternative proficiency requirement applies to the chief compliance officers of exempt market dealers and investment fund managers, as well as the chief compliance officers of mutual fund dealers, scholarship plan dealers and portfolio managers.

iv. Experience requirements for advising representatives

One commenter expressed the view that, as currently stated, the requirements in section 3.11 appear to be different for individuals holding the CFA Charter as compared to individuals having the CIM designation, while the intent of the CSA, according to the commenter, was that they be essentially similar. We disagree and did not make the proposed change to section 3.11. Unlike the CIM designation, there are experience requirements, in addition to examination requirements, that need to be fulfilled in order to obtain the CFA Charter.

v. Proficiency requirements for chief compliance officers of portfolio managers

One commenter stated that the addition of the word also in section 3.13(b)(ii) has the effect of making cumulative the requirement of 5 years experience at a Canadian financial institution and the requirement of having worked at an investment dealer or adviser for 12 months. In response, we confirm that both of these requirements need to be satisfied and the amendment to section 3.11 is for clarification only. A registrant may meet this proficiency requirement concurrently if, within a 5 year period, the registrant was able to meet both requirements outlined above.

One commenter stated that section 3.14(b)(i) of NI 31-103 should include the Exempt Market Products Exam as one of the alternate proficiency requirements, which would allow the chief compliance officer of an exempt market dealer to qualify as the chief compliance officer of an investment fund manager without gaining additional industry-specific proficiency. We disagree. These are very different categories, and while there is a correlation between investment fund manager registration and mutual funds, the same cannot be said of exempt market dealer registration and mutual funds.

vi. Proficiency requirements for dealing representatives of mutual fund dealers and exempt market dealers

We clarified our intention to allow dealing representatives of mutual fund dealers and exempt market dealers to meet the proficiency requirements in sections 3.5 and 3.9 by the individual having earned a CFA Charter and 12 months of relevant securities industry experience in the 36-month period before applying for registration.

(c) Restrictions on acting for another registered firm

We received numerous comments on our proposal to prohibit individuals from acting as a dealing or advising representative of more than one registered firm. The proposed amendment has been viewed by commenters as

• causing an unnecessary restriction in a situation where a registrant is owned by two shareholders, each holding 50% of the registrant (as the registrant is not technically an affiliate of either 50% shareholder);

• ignoring the fact that valid business reasons exist for dual registration as long as individuals have sufficient time to carry out their duties and are not in a conflict of interest which cannot be managed; and

• ignoring the fact that in circumstances where a firm's operational structure necessitates multiple legal entities, it is often appropriate and necessary for firms to register individuals with different firms.

We were therefore requested to remove this restriction or, in the alternative, add an exception for affiliated firms.

The conflicts of interest that are potentially generated by dual registration are considered significant by the CSA. As part of the review of each individual's fitness for registration, we consider all of the individual's activities. The fact that the individual may be acting for affiliated registered firms is not determinative in our view.

We amended section 4.1, however, to provide that the registered firm should ensure that their representatives do not act on behalf of more than one registered firm. This should facilitate the filing of exemption applications on behalf of several individuals who do act on behalf of more than one registered firm.

Please note that we grandfathered individuals who were dually registered before the coming into force of the amendments to section 4.1.

(d) Categories of registration - firms

Investment fund manager

One commenter described a structure of an affiliated group of funds that in their view would avoid the requirement to register more than one investment fund manager within the group. In response, we clarified in the Companion Policy that each investment fund manager is required to be registered, even where there is more than one investment fund manager within an affiliated group of funds. Investment funds organized as multiple entities within a fund complex are required to register, absent exemptive relief having been granted. Having a management agreement in place that delegates all or substantially all of the investment fund manager functions to an affiliate is only a factor we would consider in reviewing an application for exemptive relief, it is not determinative.

We received a submission that, in the context of fund complexes or groups, a general partner, trustee or board of directors of a corporation does not necessarily engage in "investment fund manager activities" and as such this entity is not required to be registered as an investment fund manager. The commenter also stated that only one investment fund manager per fund should be registered given the possibility of delegating to a registrant activities that require registration. The commenter views this as being consistent with the guidance for limited partnerships set out in section 7.3 of 31-103CP. The commenter also believes that the principle of delegation in section 7.3 should be equally applicable to trustees and corporations such that multiple registrations should not be necessary if the trust or corporation in question enters into a contract with a registered (or qualified) investment fund manager.

In response to the comment, we clarified the guidance on the requirement to register when the fund is part of a group or fund complex. We expect exemption applications to be made by investment fund managers that have delegated the management of the fund function to a registered affiliate, and we included guidance on the factors we will consider in respect of these exemption applications. We repealed the guidance on limited partnerships in view of this new guidance.

(e) Exemptions

i. Trades to or through a registered dealer

In response to requests for clearer guidance on the availability of this exemption in certain circumstances, we amended the Companion Policy to address additional situations that demonstrate the appropriate use of this exemption.

ii. Investment fund trades by advisers to managed accounts (formerly Adviser -- non-prospectus qualified investment fund)

One commenter expressed the view that an adviser that uses funds sub-advised by either affiliated or external portfolio managers would not be able to rely on this exemption when placing trades, including rebalancing trades on behalf of its managed account clients. We note that in these circumstances exemptive relief may be requested.

iii. International dealers

We were requested to amend section 8.18 to permit foreign fund managers to rely on the international dealer exemption if they are permitted to sell the securities of their foreign funds in their home jurisdictions without registration as a dealer. We believe that it would be more appropriate to consider this issue in the context of an exemptive relief application.

We received comments on the requirement that was proposed in the June 2010 Proposal on the Canadian residency requirement for permitted clients. We included a definition of Canadian permitted client and added an express restriction in this respect.

We also received several comments expressing the view that subparagraph (e) and (f) are not redundant and should not be repealed. Given the unintended consequences of this proposed change, as indicated to us by the commenters, we agree and did not repeal these subparagraphs.

We received requests for confirmation as to whether an international dealer or adviser would be required to send existing clients a new notice with the revised wording changes to section 8.18(4)(b) and 8.26(4)(e). We confirm that the requirement has no retroactive effect and that existing clients need not receive the new notice.

We received a request to clarify whether the notice to regulators required by section 8.18(5) is prospective or retrospective. We amended the provision to clarify that the notice must be given if the person or company relied on the exemption at any time during the 12 month period preceding December 1 of a year.

iv. Dealer without discretionary authority

One commenter expressed the view that the exemption from the adviser registration requirement under section 8.23 is only available to registered dealers and that this creates a regulatory gap for firms relying on dealer registration exemptions, such as the Northwestern exemption orders or the exemption in section 8.8 for investment funds and investment fund managers. We disagree. Giving advice is not permitted under the Northwestern exemption. Accordingly, the regulatory gap referred to by the commenter is not apparent: the adviser exemption is available to registered dealers because they are registered, and not to persons or companies engaging in dealing activities under the benefit of an exemption. If when acting as a dealer the person or company triggers the adviser registration requirement, they must register as an adviser unless an exemption is available.

We received a comment suggesting that there should be an exception to the disclosure requirement in section 8.25(3) where "buy, sell, or hold" recommendations are incidental to the main purpose of the publication (for example, where the main purpose is investor education). The commenter believes that the disclosure requirements in subsection 8.25(3) are onerous and impractical. We remind the commenter that disclosure is required by the person providing advice under this exemption only where certain persons or companies have a financial interest or other interest in the security or securities being recommended. These are not new requirements. We do not agree with a distinction in disclosure requirements depending on the main or incidental purpose of the publication.

v. International advisers

One commenter has suggested that the intention of the international adviser exemption has been to provide qualifying clients with access to investment advice on foreign securities, which is often provided by way of global mandates. By their nature global mandates are structured to include some appropriate weighting for Canadian issuers reflecting Canada's relative economic position on a global basis.

While we did not make the change suggested by the commenter, we included guidance in the Companion Policy on permissible incidental advice on Canadian securities by international advisers relying upon the exemption under section 8.26. We provide examples of such permissible incidental advice.

We received the same comments and request for clarification on the Canadian residency requirement of permitted clients, the client notice and regulator notice, respectively, as for the international dealer exemption, and our responses are the same.

(f) Exceptions for members of self-regulatory organizations (SROs)

We received a comment recommending that we delay the application of the proposed change to section 9.3(6) in Québec until the adoption of the MFDA-harmonized rules. The commenter states that the proposed amendment to the exemptions found under subsection 9.3(6) may have a significant impact on mutual fund dealers operating in Québec. Paragraph 9.3(6) currently exempts mutual fund dealers in Québec from the same ongoing registrant obligations as those for which MFDA members are exempt, provided that the mutual fund dealer complies with applicable regulations in Québec.

The Autorité des marchés financiers has previously publicly stated that it intends to adopt rules largely harmonized to those of the MFDA by September 2011. Assuming that the proposed amendments to NI 31-103 will be enforced sometime in early 2011, the commenter is of the view that mutual fund dealers operating in Québec will need to comply with some of the ongoing registrant obligations in NI 31-103 for a few months, to then be subject to the new MFDA-harmonized rules.

We disagree with the comment. Mutual fund dealers in Québec must comply, since September 28, 2009, with certain sections NI 31-103, including section 14.2 and section 14.12. In the case of section 14.2, the Autorité des marchés financiers granted an exemptive relief order on September 1, 2010 to extend to mutual fund dealers in Québec the same transition granted to MFDA members. The amendment to the Rule in respect of the exemption now provided in section 9.4(4) is a clarification of the regime applicable to mutual fund dealers in Québec.

This section now provides that in Québec, the requirements listed in subsection (1) of section 9.4 do not apply to a mutual fund dealer to the extent equivalent requirements to those listed in subsection (1) are applicable to the mutual fund dealer under the regulations in Québec.

We refer in section 9.4(4) to existing requirements in Québec. The effect of section 9.4(4) is that existing requirements in Québec apply, and not the corresponding NI 31-103 requirement in respect of

• section 12.1 [capital requirements]

• section 12.2 [notifying the regulator of a subordination agreement]

• section 12.3 [insurance -- dealer]

• section 12.6 [global bonding or insurance]

• section 12.7 [notifying the regulator of a change, claim or cancellation]

• section 13.3 [suitability]

• section 13.12 [restriction on lending to clients]

• section 13.13 [disclosure when recommending the use of borrowed money]

• section 13.15 [handling complaints]

• subsection 14.2(2) [relationship disclosure information]

• section 14.6 [holding client assets in trust]

• section 14.8 [securities subject to a safekeeping agreement]

• section 14.9 [securities not subject to a safekeeping agreement]

Since there is no equivalent existing requirement in Québec, the following sections of the Rule, which are included in section 9.4(1), do apply to mutual fund dealers in Québec:

• section 12.10 [annual financial statements]

• section 12.11 [interim financial information]

• section 12.12 [delivering financial information -- dealer]

• section 14.12 [content and delivery of trade confirmation]

We received a request to exempt SRO members also registered in other categories from the requirement to file financial statements and working capital forms with regulators. We are not making this requested change at this time. We note that SRO members that are registered in multiple categories may use the forms prescribed by the SROs, on certain conditions. See sections 12.1, 12.12 and 12.14 for requirements on calculating working capital and the delivery of working capital calculations for SRO members that are registered in multiple categories.

(g) Compliance systems

We received a comment to the effect that the guidance provided in the Companion Policy is unclear whether systemic monitoring responsibilities can be fulfilled through firm procedures, or whether an "off-the-shelf product" is required. We reiterate that the compliance systems requirements in the rule are principles-based and we do not mandate how registrants comply with the requirement.

(h) Solvency and financial reporting requirements

i. Capital requirements

We received comments that the current requirement that all guarantees, irrespective of their risk and/or character, be included in excess working capital, is unnecessarily onerous. The commenters submit that the interests of the public are best served by an excess working capital calculation that accounts for each of the following factors: (a) the size of the guarantee; (b) the registrant's category; (c) the likelihood the guarantee will be called; and (d) the nature of the guarantee (third-party guarantees versus related-party guarantees).

It is not possible to anticipate all situations suggested by the commenter. The excess working capital calculation has been designed to apply to all non-SRO registrants. Exemptive relief may be available if the requirement to include all guarantees is unduly burdensome.

We were also asked to reflect the non-cumulative nature of the capital requirements for a firm holding multiple registrations. We note that this is already stated in section 12.1 of the Companion Policy, under the heading Working capital requirements are not cumulative.

Finally, one commenter is of the view that there should be an exemption for US broker dealers provided they file the Financial Industry Regulatory Authority, Inc. (FINRA) form. We are not prepared to make this change at this time but will consider exemptive relief applications if certain conditions are met.

ii. Insurance requirements

We were asked to clarify in Form 31-103F1 that the "bonding or insurance policy" refers only to the bonding or insurance the firm must maintain pursuant to Part 12 of NI 31-103. We agree with the commenter and amended Form 31-103F1 accordingly.

One commenter has suggested that we amend Appendix A -- Bonding and Insurance Clauses. The commenter believes that there are always exclusions and terms and conditions in commercially available bonding or insurance that limit coverage to something less than any loss arising from the listed risks. As a result, the commenter stated that strict compliance with these requirements is impossible. We disagree. The clauses in Appendix A are those currently being used in industry.

(i) KYC and suitability

We received comments to the effect that according to section 13.2(7), a registrant who is registered both as a mutual fund dealer (exempt from MFDA membership) and as an adviser would not be exempt from the requirement to establish whether a client is an insider of a reporting issuer.

The commenter believes that compliance with this requirement should depend on the capacity in which the registrant is acting in respect of a particular client and not on the number of categories of registration the firm or the individual holds. We agree and granted new blanket/omnibus relief in November 2010. We amended section 13.2(7) in the June 2010 Proposal accordingly.

(j) Restrictions on certain managed account transactions

We received several comments on the scope and application of section 13.5 for registered dealers that are members of IIROC and who conduct advising activities (IIROC advisers) to managed accounts. One of the commenters is of the view that if an IIROC adviser's proprietary inventory account is considered to be an "investment portfolio" for the purposes of section 13.5(2)(b) of NI 31-103, the amended section 13.5 of NI 31-103 (as published as part of the June 2010 Proposal) would prohibit the IIROC adviser from selling fixed income securities from its inventory account to its discretionary managed account clients. We had not fully considered the impact that the June 2010 Proposal would have on the ability of an IIROC adviser to trade securities from its inventory account.

Therefore, we did not make the change proposed in the June 2010 Proposal. However, we added additional guidance in the Companion Policy on this issue.

(k) Referral arrangements

In response to a comment that the definition of referral arrangements is too broad, we again note, as in previous comment responses throughout the consultation process on NI 31-103, that this definition is intended by the CSA to be broad, as we are concerned with the business conduct of registered individuals. We however added guidance in the Companion Policy indicating our view that the receipt of an unexpected gift of appreciation would not fall within the scope of a referral arrangement.

We received numerous comments on the fact that the provisions in NI 31-103 relating to referral arrangements and the rules made by IIROC and the MFDA in order to conform with NI 31-103 could result in the unintended consequence of regulating business arrangements of registered individuals acting in the capacity of a licensed insurance agent outside their dealer that are not related to securities-related business.

We confirm, in response to questions raised by commenters, that:

• we do not generally view a syndication arrangement for the offering of securities as a referral arrangement;

• the referral arrangement regime in the Rule does not prescribe that payment of referral fees be made to the firm;

• the requirement to ensure that the required disclosure is provided to clients rests on the registered firm; however, it can be provided by either party provided it is clearly set out in the referral agreement;

• an arrangement to purchase a list of potential clients may be considered a referral arrangement;

• a finder's fee may be considered to be within the scope of the referral arrangement provisions; and

• we reiterate that referral arrangements within the same firm are not generally covered by the regime, however, we expect a registered firm to consider these types of referrals as part of the conflicts requirements in section 13.4.

(l) Loans and margins

We received a comment stating that section 13.12 should be amended to allow loans made by an investment fund manager to a fund where the loan is for the purposes of enabling a fund to temporarily pay for unitholder redemptions and fund expenses. We acknowledge that an investment fund manager that lends money, extends credit or provides margin in certain circumstances may be prohibited from these activities under section 13.12. Accordingly we have provided an exception in section 13.12(2) which allows an investment fund manager to make certain loans. Where any conflicts of interest arise in respect of these short-term loans, we expect registrants to manage that conflict.

One commenter has asked that we clarify whether section 13.12 is intended to prohibit a registrant from providing products to its clients that have embedded in them a leverage component. We amended the Companion Policy to provide additional guidance on this issue.

(m) Complaint handling

We received requests for clarification on the interface between the Québec regime for complaint handling, including specific questions as to how compliance with the Securities Act (Québec) provisions, which is deemed to be compliance with the Rule, is affected when the registrant is registered in several jurisdictions.

The Rule provisions on complaint handling are based on the Québec regime. However, Québec cannot adopt in a Rule provisions that are, in substance, already in its legislation. To the extent a registrant deals with a client in Québec, it must comply with sections 168.1.1 to 168.1.3 of the Securities Act (Québec) in all cases. When dealing with clients in other jurisdictions, the registrant must meet the Rule requirements. The only substantive difference is that the Autorité des marchés financiers will generally not act as mediator for complaints of clients outside Québec.

We also received comments stating that the guidance in the Companion Policy is prescriptive and as such, should be in the Rule. We remind commenters that the guidance, which was developed by the CSA together with IIROC and the MFDA, sets out our expectation on what would constitute an effective complaint handling system. The requirement to deal with client complaints provided in the Rule remains a principle-based requirement.

(n) Dispute resolution service

We received comments on the proposed list of complaints in section 13.16. We have not made this change and have maintained the language in the current law.

We have extended, in section 16.16, the transition period for the coming into force, outside Québec, of section 13.16 to September 28, 2012 to allow the CSA to further consider this regime in light of a number of questions we have received. Considering the importance of this provision in respect of investor protection, we may publish proposed amendments for comments in the future.

Commenters have suggested that the SROs amend their rules to provide the same choice of dispute resolution service. We note both IIROC and the MFDA rules mandate membership in the Ombudsman for banking services and investments (OBSI), which is consistent with section 13.16 of the Rule since OBSI is considered an independent dispute resolution service. We note that SRO rules may be more prescriptive than the requirements prescribed in the Rule.

(o) Relationship disclosure information

A commenter has requested that section 14.2(j) be amended in order to reflect the transition period for the coming into force of section 13.16 [Dispute resolution service]. We agree and amended section 14.2(j) accordingly.

(p) Notice to clients by non-resident registrants

We received comments requiring clarifications on the meaning of physical place of business. We also received a comment expressing the view that we should consider revising section 14.5 to exempt all registered firms who have a head office in Canada from the requirement to provide a section 14.5 notice to those of its clients who live in any other Canadian province or territory, regardless of whether the registered firm has a place of business in that Canadian province or territory.

We amended section 14.5 by adding an exception to the requirement to provide the risk notice to clients in a local jurisdiction if the firm has its head office in Canada and is registered in the local jurisdiction. The Rule no longer refers to a physical place of business.

(q) Account activity reporting

i. Trade confirmations

Further to the June 2010 Proposal, we are adding a requirement in section 14.12(5) for investment fund managers to send trade confirmations in certain circumstances. One commenter has expressed the view that section 8.6(1) exempts a portfolio manager from the requirement to register as an exempt market dealer if the portfolio manager acts as adviser and as investment fund manager to a fund, and the trades in units of the fund are with managed accounts of the portfolio manager. The commenter suggested that one unintended consequence of the addition of section 14.12(5) in the June 2010 Proposal is that it reinstates the requirement to send trade confirmations while the Rule exempts the firm relying on the section 8.6 exemption from this requirement. We agree with the commenter and have added a new subsection 14.12(6) which states that the trade confirmation requirement does not apply to trades made in reliance on section 8.6.

We received a comment expressing the view that 14.12 of the Companion Policy should be amended to confirm that the existing documentation is sufficient to satisfy a dealer's outsourcing obligations. In response to this comment, we reiterate that firms may meet their obligations in a variety of ways, and our expectation is that firms ensure they are meeting the requirements to oversee their service providers. The level of oversight and the determination as to whether existing arrangements meet those requirements is up to the firm. We confirm that the guidance on outsourcing is not retroactive.

ii. Account statements

We received informative comments on our consultation on what securities are required to be reported in account statements and on the determination of the value of the securities reported in account statements. We have not made the proposed amendments to section 14.14 of the Rule that would have required that securities be valued using fair value. Section 14.14 continues to refer to market value.

We were asked to provide further clarity for scholarship plan dealers with respect to account reporting, given that these firms are scholarship plan dealers and investment fund managers of scholarship plans. We did not make any change to the Rule or the Companion Policy, as the dealer has the responsibility to send the account statements, and dual registration does not impact this requirement. The dealer may however outsource this function to the investment fund manager, but the dealer remains responsible for the reporting it outsources. We provide guidance on outsourcing in the Companion Policy.

On the timelines for providing account statements, we received a comment to the effect that the requirement to deliver monthly statements would apply to the dealer's registration as an exempt market dealer but not to the dealer's registration as a mutual fund dealer creating a misalignment in timing of delivery of statements. Each category of registration has its own requirements, which in certain cases may not align for registrants in multiple registration categories. We expect compliance with the Rule as prescribed for each category.

We were requested to clarify that registered dealers can continue to rely on third-party pricing providers when an observable market price is unavailable. We confirm that third-party pricing providers can be used by registrants to determine valuation of securities where an observable market price is unavailable, provided that there is adequate oversight of the service providers by the registrant in accordance with the guidance on outsourcing in the Companion Policy.

We received comments suggesting that registrants should be exempt from the requirement to send account statements where another party is sending a statement. We provide guidance on outsourcing in the Companion Policy.

3. Responses to comments received on NI 33-109 and related Forms

(a) NI 33-109

We received a comment that the definition of "permitted individual" in NI 33-109 should be revised to clarify that a permitted individual may also be a registered individual. We amended the definition accordingly. We clarified the guidance in 33-109CP to confirm that a permitted individual may or may not be a registered individual.

One commenter has stated the CSA should consider extending the deadline from 7 days to 10 business days to report material changes (for example, outside business activities, criminal disclosure, etc.) since it can take time for registered firms to review the individual's information for completeness and gather the necessary supporting documents prior to reporting the change on the National Registration Database (NRD). We agree that longer timelines for filings are appropriate and changed all 5 business day and 7-day time periods to 10 days. Please note that the revised 10 day period is not 10 business days.

(b) Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals

One commenter has asserted that section 4 of Item 5 of Form 33-109F1 (which requires disclosure of "any written complaints, civil claims and/or arbitration notices filed against the individual or against the firm about the individual's securities-related activities..." in the past 12 months) is too broad in its scope. We disagree with the commenter. Written complaints are usually serious enough to warrant disclosure in section 4 of Item 5. We require this information in order to assess continued fitness for registration of the individual.

(c) Form 33-109F4Registration of Individuals and Review of Permitted Individuals

We received several comments on this form:

• one commenter stated that the instructions contained in this form, which advises the applicant to contact the compliance, registration or legal department of the sponsoring firm or a legal advisor if they have any questions relating to the information contained on the application, should be removed. The commenter is of the view that unless the legal adviser is familiar with securities regulations pertaining to disclosures, they could provide the registrant with inappropriate advice. This has occurred on a number of occasions where applicants failed to provide required information based on advice received from an outside legal source. Consequently, we amended the instructions to indicate that the applicant should consult with a legal advisor with securities regulation experience;

• in response to the comment that since "branch manager" is no longer an IIROC category this field should be updated to indicate Name of Supervisor or Branch Manager. We agree and made this change;

• one commenter suggested the language in the third section of Item 8.4 of Schedule F be amended to only relate to relevant experience. We disagree. This schedule is meant to capture level of responsibility, how much time has been spent on these activities and the applicant's continuous education activities. These elements combine to form a description of relevant experience;

• one commenter stated that we should amend paragraph 2 of the guidance notes which advises applicants that they must disclose offences even if an absolute or conditional discharge has been granted (except as per outlined exceptions) or the charge has been dismissed, withdrawn or stayed. The commenter does not believe this is relevant information. We have not changed this paragraph because we believe that, although the charges may no longer be outstanding, they may form part of the assessment of the applicant's fitness for registration;

• we received a comment to the effect that the requirement to provide a listing of all individual creditors included in a bankruptcy or proposal which has been discharged is superfluous and that it should be sufficient to provide the total outstanding amount owing at the time of the bankruptcy or proposal. We disagree. The list of creditors is relevant in assessing the solvency of the applicant;

• we did not amend the form to indicate whether another business activity results in a shared premises situation; and

• in response to the comment that we should append a specific form for the submission to jurisdiction and appointment of agent for service for individuals, we added guidance in 33-109CP indicating that the form used by the firm is an acceptable format to the regulator.

(d) Form 33-109F5 Change of Registration Information

We agree with the comment that we should add the NRD number and the registration categories of the firm, and have made this change.

(e) Form 33-109F6 Firm Registration

We received several comments on the requirements to provide information on "specified affiliates"; commenters stated that they consider the list of specified affiliates to be too broad and onerous to provide this disclosure. We note that, as outlined in Part 9 Certification, all information must be provided to the best of the applicant's knowledge and after reasonable inquiry. We acknowledge that this disclosure will vary according to the size of the firm and the number of affiliates. We amended Parts 7 and 8 to limit the information that must be provided to the last seven years in order that this disclosure is less onerous.

We received a request to clarify the meaning of "significant conflicts of interest" in section 6.2 of Form 33-109F6. As this is a principle based requirement, we expect registrants to make this determination according to the nature of the conflict and the size and activities of the firm.

List of commenters

• Advocis

• Alternative Investment Management Association - Canada

• BMO Financial Group's Private Client Group

• Borden Ladner Gervais LLP

• Canadian Bankers Association of Canada

• Canadian Foundation for Advancement of Investor Rights

• Canadian Imperial Bank of Commerce

• Canadian Investor Protection Fund

• Chambre de la sécurité financière (available on the AMF website only)

• CI Investments Inc.

• CSI Global Education, Inc.

• Edward Jones

• Exempt Market Dealers Association of Canada

• Fidelity Investments Canada ULC

• Gestion Universitas (available on the AMF website only)

• IGM Financial Inc.

• Independent Financial Brokers of Canada

• Investment Funds Institute of Canada

• Investment Industry Association of Canada

• Irwin, White & Jennings counsel to Growth Works Capital Ltd.

• Lycos Asset Management Inc.

• Manulife Securities Incorporated and Manulife Securities Investment Services Inc.

• Mouvement d'éducation et de défense des actionnaires (MÉDAC) (available on the AMF website only)

• Mouvement Desjardins (available on the AMF website only)

• Mutual Fund Dealers Association of Canada

• Nexus Investment Management Inc.

• Osler, Hoskin & Harcourt LLP

• RBC Dominion Securities Inc.

• RESP Dealers Association of Canada

• Rogers Group Financial

• Stikeman Elliot LLP

• Stonegate Private Counsel

 

Appendix C Adoption of the Instrument

APPENDIX C

ADOPTION OF THE INSTRUMENT

The Canadian Securities Administrators (CSA) are implementing amendments (the Amendments) to National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103 or the Rule), Companion Policy 31-103CP Registration Requirements and Exemptions (31-103CP) and National Instrument 33-109 Registration Information, Companion Policy 33-109CP Registration Information and related forms (NI 33-109) (collectively, the Instrument).

The amendments to NI 31-103 and to NI 33-109 will be implemented as:

• a rule in each of Alberta, British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, New Brunswick, Ontario and Prince Edward Island

• a regulation in each of Québec, the Northwest Territories, Nunavut and the Yukon Territory

• a commission regulation in Saskatchewan

The amendments to 31-103CP will be adopted as a policy in each of the jurisdictions represented by the CSA.

In Ontario, the Amendments and other required materials were delivered to the Minister of Finance on April 15, 2011. The Minister may approve or reject the Rule or return it for further consideration. If the Minister approves the Rule or does not take any further action, the Amendments will come into force on July 11, 2011.

In Québec, the Amendments are adopted as a regulation made under section 331.1 of the Securities Act (Québec) and must be approved, with or without amendment, by the Minister of Finance. The regulation will come into force on the date of its publication in the Gazette officielle du Québec or on any later date specified in the regulation. It is also published in the Bulletin of the Autorité des marchés financiers.

In British Columbia, the implementation of the Amendments is subject to ministerial approval. Provided all necessary approvals are obtained, British Columbia expects the Rule to come into force on July 11, 2011.

 

Appendix D Amending instrument to NI 31-103

APPENDIX D

AMENDMENTS TO NATIONAL INSTRUMENT 31-103

REGISTRATION REQUIREMENTS AND EXEMPTIONS

1. National Instrument 31-103 Registration Requirements and Exemptions is amended by this Instrument.

2. The title is amended by replacing "and Exemptions" with ", Exemptions and Ongoing Registrant Obligations".

3. Subsection 1.1 is amended by

(a) deleting the definition of "NI 45-106",

(b) replacing paragragh (d) of the definition of "permitted client" with the following:

(d) a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser, investment dealer, mutual fund dealer or exempt market dealer;, and

(c) by replacing "NI 45-106" wherever the expression occurs with "National Instrument 45-106 Prospectus and Registration Exemptions".

4. Subsection 1.3 (1) is amended

(a) in paragraphs (a) and (b) by replacing "registered firm" with "person or company",

(b) in subparagraph (b)(i) by replacing "firm" wherever the expression occurs with "person or company", and

(c) in subparagraph (b)(ii) by replacing "firm's" with "person or company's".

5. Section 3.1 is amended

(a) in the definition of "Canadian Investment Funds Exam" by replacing "Canadian Investment Funds Exam" with "Canadian Investment Funds Course Exam",

(b) by replacing "Investment Funds Institute of Canada" wherever it occurs with "IFSE Institute"; and

(c) by adding the following after the definition of "Canadian Securities Course Exam":

"Chief Compliance Officers Qualifying Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;"

6. Section 3.3 is replaced with the following:

3.3 Time limits on examination requirements

(1) For the purpose of this Part, an individual is deemed to have not passed an examination unless the individual passed the examination not more than 36 months before the date of his or her application for registration.

(2) Subsection (1) does not apply if the individual passed the examination more than 36 months before the date of his or her application and has met one of the following conditions:

(a) the individual was registered in the same category in any jurisdiction of Canada at any time during the 36-month period before the date of his or her application;

(b) the individual has gained 12 months of relevant securities industry experience during the 36-month period before the date of his or her application.

(3) For the purpose of paragraph (2)(a), an individual is not considered to have been registered during any period in which the individual's registration was suspended.

7. Subsection 3.4 (1) is amended by adding ", including understanding the structure, features and risks of each security the individual recommends" after "competently".

8. Section 3.5 is replaced with the following:

3.5 Mutual fund dealer -- dealing representative

A dealing representative of a mutual fund dealer must not act as a dealer in respect of the securities listed in section 7.1(2)(b) unless any of the following apply:

(a) the individual has passed the Canadian Investment Funds Course Exam, the Canadian Securities Course Exam or the Investment Funds in Canada Course Exam;

(b) the individual has met the requirements of section 3.11 [portfolio manager - advising representative];

(c) the individual has earned a CFA Charter and has gained 12 months of relevant securities industry experience in the 36-month period before applying for registration;

(d) the individual is exempt from section 3.11 [portfolio manager - advising representative] because of subsection 16.10(1) [proficiency for dealing and advising representatives].

9. Section 3.6 is amended

(a) in subparagraph (a)(i) by replacing "Canadian Investment Funds Exam" with "Canadian Investment Funds Course Exam",

(b) in subparagraph (a)(ii) by replacing "or" with "," and by adding "or the Chief Compliance Officers Qualifying Exam;" after "Compliance Exam"; and

(c) by adding the following after paragraph (b):

(c) section 3.13 [portfolio manager - chief compliance officer] does not apply in respect of the individual because of subsection 16.9(2) [registration of chief compliance officers].

10. Section 3.7 is replaced with the following:

3.7 Scholarship plan dealer -- dealing representative

A dealing representative of a scholarship plan dealer must not act as a dealer in respect of the securities listed in section 7.1(2)(c) unless the individual has passed the Sales Representative Proficiency Exam.

11. Section 3.8 is amended by adding, in paragraph (c), after "Exam", "or the Chief Compliance Officers Qualifying Exam."

12. Section 3.9 is replaced with the following:

3.9 Exempt market dealer -- dealing representative

A dealing representative of an exempt market dealer must not perform an activity listed in section 7.1(2)(d) unless any of the following apply:

(a) the individual has passed the Canadian Securities Course Exam;

(b) the individual has passed the Exempt Market Products Exam;

(c) the individual has earned a CFA Charter and has gained 12 months of relevant securities industry experience in the 36-month period before applying for registration;

(d) the individual satisfies the conditions set out in section 3.11 [portfolio manager- advising representative];

(e) the individual is exempt from section 3.11 [portfolio manager - advising representative] because of subsection 16.10(1) [proficiency for dealing and advising representatives].

13. Section 3.10 is replaced with the following:

3.10 Exempt market dealer -- chief compliance officer

An exempt market dealer must not designate an individual as its chief compliance officer under subsection 11.3(1) [designating a chief compliance officer] unless any of the following apply:

(a) the individual has passed the following:

(i) the Exempt Market Products Exam or the Canadian Securities Course Exam; and

(ii) the PDO Exam or the Chief Compliance Officers Qualifying Exam;

(b) the individual has met the requirements of section 3.13 [portfolio manager -- chief compliance officer];

(c) section 3.13 [portfolio manager - chief compliance officer] does not apply in respect of the individual because of subsection 16.9(2) [registration of chief compliance officers].

14. Section 3.11 is replaced with the following:

3.11 Portfolio manager -- advising representative

An advising representative of a portfolio manager must not act as an adviser on behalf of the portfolio manager unless any of the following apply:

(a) the individual has earned a CFA Charter and has gained 12 months of relevant investment management experience in the 36-month period before applying for registration;

(b) the individual has received the Canadian Investment Manager designation and has gained 48 months of relevant investment management experience, 12 months of which was gained in the 36-month period before applying for registration.

15. Section 3.12 is replaced with the following:

3.12 Portfolio manager -- associate advising representative

An associate advising representative of a portfolio manager must not act as an adviser on behalf of the portfolio manager unless any of the following apply:

(a) the individual has completed Level 1 of the Chartered Financial Analyst program and has gained 24 months of relevant investment management experience;

(b) the individual has received the Canadian Investment Manager designation and has gained 24 months of relevant investment management experience.

16. Section 3.13 is amended

(a) by replacing subparagraph (a)(ii) with the following:

(ii) passed the PDO Exam or the Chief Compliance Officers Qualifying Exam and, unless the individual has earned the CFA Charter, the Canadian Securities Course Exam, and;

(b) in clause (a)(iii)(B) by adding "also" after "and",

(c) in paragraph (b) by replacing "the PDO" with "either the PDO Exam or the Chief Compliance Officers Qualifying",

(d) in subparagraph (b)(ii) by adding "also" after "and", and

(e) in paragraph (c) by replacing "the PDO" with "either the PDO Exam or the Chief Compliance Officers Qualifying".

17. Section 3.14 is amended

(a) by replacing subparagraph (a)(ii) with the following:

(ii) passed the PDO Exam or the Chief Compliance Officers Qualifying Exam and, unless the individual has earned the CFA Charter, the Canadian Securities Course Exam, and,

(b) in clause (a)(iii)(B) by adding "also" after "and",

(c) in subparagraph (b)(i) by adding "Course" after "Canadian Investment Funds",

(d) in subparagraph b(ii) by adding "or the Chief Compliance Officers Qualifying Exam" after "Exam",

(e) by adding the following after paragraph (c):

(d) section 3.13 [portfolio manager - chief compliance officer] does not apply in respect of the individual because of subsection 16.9(2) [registration of chief compliance officers].

18. Section 3.15 is amended

(a) in subsection (1) by adding "that is a member of IIROC" after "dealer", and

(b) in subsection (2) by adding "that is a member of the MFDA" after "dealer".

19. Subsection 3.16(3) is replaced with the following:

(3) In Québec, the requirements listed in subsection (2) do not apply to a registered individual who is a dealing representative of a mutual fund dealer to the extent equivalent requirements to those listed in subsection (2) are applicable to the registered individual under the regulations in Québec.

20. Section 4.1 is replaced with the following:

4.1 Restriction on acting for another registered firm

(1) A registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual

(a) acts as an officer, partner or director of another registered firm that is not an affiliate of the first-mentioned registered firm, or

(b) is registered as a dealing, advising or associate advising representative of another registered firm.

(2) Paragraph (1)(b) does not apply in respect of a representative whose registration as a dealing, advising or associate advising representative of more than one registered firm was granted before July 11, 2011.

21. Subsection 4.2(3) is amended by adding "or, in Québec, the securities regulatory authority" after "the regulator".

22. Section 6.7 is replaced with the following:

6.7 Exception for individuals involved in a hearing or proceeding

Despite section 6.6, if a hearing or proceeding concerning a suspended registrant is commenced under securities legislation or under the rules of an SRO, the registrant's registration remains suspended.

23. Section 7.1 is amended

(a) in subparagraph (2)(b)(ii) by striking out "except in Quebec,", and

(b) by repealing subsection (3).

24. Section 8.6 is amended

(a) by replacing the heading with "Investment fund trades by adviser to managed account",

(b) in subsection (1) by replacing "a non-prospectus qualified" with "an",

(c) in subsection (2) by striking out "non-prospectus qualified", and

(d) in subsection (3) by adding "or, in Québec, the securities regulatory authority" after "regulator",

(e) in subsection (3) by replacing "7 days" with "10 days".

25. Section 8.14 is amended by replacing "NI 45-106" with "National Instrument 45-106 Prospectus and Registration Exemptions".

26. Subsection 8.16 (1) is amended by deleting ""control person" has the same meaning as in section 1.1 of NI 45-106;" and by replacing "NI 45-106" with "National Instrument 45-106 Prospectus and Registration Exemptions" wherever the expression occurs.

27. Subsection 8.17 (5) is amended by replacing "8.3.1" with "8.4" and "NI 45-106"with "National Instrument 45-106 Prospectus and Registration Exemptions".

28. Section 8.18 is amended

(a) in subsection (1) by deleting "," after "In this section" and by adding the following before the definition of "foreign security":

"Canadian permitted client" means a permitted client referred to in any of paragraphs (a) to (e), (g) or (i) to (r) of the definition of "permitted client" in section 1.1 if

(a) in the case of an individual, the individual is a resident of Canada;

(b) in the case of a trust, the terms of the trust expressly provide that those terms are governed by the laws of a jurisdiction of Canada;

(c) in any other case, the permitted client is incorporated, organized or continued under the laws of Canada or a jurisdiction of Canada.

(b) in subsection (2) by adding "any of" after "in respect of",

(c) in paragraphs (b), (c) and (d) by adding "Canadian" before "permitted client",

(d) in subsection (3) by replacing "exemptions" with "exemption" and "are" with "is",

(e) by replacing paragraph (3)(d) with the following:

(d) the person or company is acting as principal or as agent for

(i) the issuer of the securities

(ii) a permitted client, or

(iii) a person or company that is not a resident of Canada;

(f) by replacing paragraph (4) with the following:

(4) The exemption under subsection (2) is not available to a person or company in respect of a trade with a Canadian permitted client unless one of the following applies:

(a) the Canadian permitted client is a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer;

(b) the person or company has notified the Canadian permitted client of all of the following:

(i) the person or company is not registered in the local jurisdiction to make the trade;

(ii) the foreign jurisdiction in which the head office or principal place of business of the person or company is located;

(iii) all or substantially all of the assets of the person or company may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the person or company because of the above;

(v) the name and address of the agent for service of process of the person or company in the local jurisdiction.

(g) by replacing subsection (5) with the following:

(5) A person or company that relied on the exemption in subsection (2) during the 12 month period preceding December 1 of a year must notify the regulator or, in Québec, the securities regulatory authority of that fact by December 1 of that year,and

(h) by adding the following after subsection (6):

(7) The adviser registration requirement does not apply to a person or company that is exempt from the dealer registration requirement under this section if the person or company provides advice to a client and the advice is

(a) in connection with an activity or trade described under subsection (2), and

(b) not in respect of a managed account of the client.

29. Subparagraph 8.19(2)(a)(i) is amended by adding, after "dealer", "in respect of securities listed in section 7.1(2)(b)".

30. Paragraph 8.22 (2)(d) is amended by replacing "$25 000" with "$25,000".

31. The Note to Section 8.25 is amended by replacing "7.24" with "8.25".

32. Section 8.26 is amended by

(a) replacing the definition of "permitted client" with the following:

"Canadian permitted client" means a permitted client referred to in any of paragraphs (a) to (c), (e), (g) or (i) to (r) of the definition of "permitted client" in section 1.1 if

(a) in the case of an individual, the individual is a resident of Canada;

(b) in the case of a trust, the terms of the trust expressly provide that those terms are governed by the laws of a jurisdiction of Canada; and

(c) in any other case, the permitted client is incorporated, organized or continued under the laws of Canada or a jurisdiction of Canada, and

(b) replacing paragraphs (3), (4) and (5) with the following:

(3) The adviser registration requirement does not apply to a person or company in respect of its acting as an adviser to a Canadian permitted client if the adviser does not advise that client on securities of Canadian issuers, unless providing that advice is incidental to its providing advice on a foreign security.

(4) The exemption under subsection (3) is not available unless all of the following apply:

(a) the adviser's head office or principal place of business is in a foreign jurisdiction;

(b) the adviser is registered or operates under an exemption from registration, under the securities legislation of the foreign jurisdiction in which its head office or principal place of business is located, in a category of registration that permits it to carry on the activities in that jurisdiction that registration as an adviser would permit it to carry on in the local jurisdiction;

(c) the adviser engages in the business of an adviser in the foreign jurisdiction in which its head office or principal place of business is located;

(d) as at the end of its most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the adviser, its affiliates and its affiliated partnerships was derived from the portfolio management activities of the adviser, its affiliates and its affiliated partnerships in Canada;

(e) before advising a client, the adviser notifies the client of all of the following:

(i) the adviser is not registered in the local jurisdiction to provide the advice described under subsection (3);

(ii) the foreign jurisdiction in which the adviser's head office or principal place of business is located;

(iii) all or substantially all of the adviser's assets may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the adviser because of the above;

(v) the name and address of the adviser's agent for service of process in the local jurisdiction;

(f) the adviser has submitted to the securities regulatory authority a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service.

(5) A person or company that relied on the exemption in subsection (3) during the 12 month period preceding December 1 of a year must notify the regulator or, in Québec, the securities regulatory authority of that fact by December 1 of that year.

33. Section 8.29 is amended by adding the following after subsection (2):

(3) This section does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, subsection 35.1 of the Securities Act (Ontario) provides a general exemption from the registration requirement for trust companies, trust corporations and other specified financial institutions.

- - - - - - - - - - - - - - - - - - - -

34. Section 9.3 is amended

(a) in the heading by replacing "SRO" with "IIROC",

(b) by replacing the introductory sentence in subsection (1) with

(1) Unless it is also registered as an investment fund manager, a registered firm that is a member of IIROC is exempt from the following requirements:"

(c) in subsection (1) by inserting the following after paragraph (l):

(l.1) section 13.15 [handling complaints];

(d) by replacing subsection (2) with the following:

(2) If a registered firm is a member of IIROC and is registered as an investment fund manager, the firm is exempt from the following requirements:

(a) section 12.3 [insurance -- dealer];

(b) section 12.6 [global bonding or insurance];

(c) section 12.12 [delivering financial information - dealer];

(d) subsection 13.2(3) [know your client];

(e) section 13.3 [suitability];

(f) section 13.12 [restriction on lending to clients];

(g) section 13.13 [disclosure when recommending the use of borrowed money];

(h) section 13.15 [handling complaints];

(i) subsection 14.2(2) [relationship disclosure information];

(j) section 14.6 [holding client assets in trust];

(k) section 14.8 [securities subject to a safekeeping agreement];

(l) section 14.9 [securities not subject to a safekeeping agreement];

(m) section 14.12 [content and delivery of trade confirmation]., and

(e) by repealing subsections (3), (4), (5) and (6).

35. This instrument is amended by adding the following after section 9.3:

9.4 Exemptions from certain requirements for MFDA members

(1) Unless it is also registered as an exempt market dealer, a scholarship plan dealer or an investment fund manager, a registered firm that is a member of the MFDA is exempt from the following requirements:

(a) section 12.1 [capital requirements];

(b) section 12.2 [notifying the regulator of a subordination agreement];

(c) section 12.3 [insurance - dealer];

(d) section 12.6 [global bonding or insurance];

(e) section 12.7 [notifying the regulator of a change, claim or cancellation];

(f) section 12.10 [annual financial statements];

(g) section 12.11 [interim financial information];

(h) section 12.12 [delivering financial information - dealer];

(i) section 13.3 [suitability];

(j) section 13.12 [restriction on lending to clients];

(k) section 13.13 [disclosure when recommending the use of borrowed money];

(l) section 13.15 [handling complaints];

(m) subsection 14.2(2) [relationship disclosure information];

(n) section 14.6 [holding client assets in trust];

(o) section 14.8 [securities subject to a safekeeping agreement];

(p) section 14.9 [securities not subject to a safekeeping agreement];

(q) section 14.12 [content and delivery of trade confirmation].

(2) If a registered firm is a member of the MFDA and is registered as an exempt market dealer, scholarship plan dealer or investment fund manager, the firm is exempt from the following requirements:

(a) section 12.3 [insurance - dealer];

(b) section 12.6 [global bonding or insurance];

(c) section 13.3 [suitability];

(d) section 13.12 [restriction on lending to clients];

(e) section 13.13 [disclosure when recommending the use of borrowed money];

(f) section 13.15 [handling complaints];

(g) subsection 14.2(2) [relationship disclosure information];

(h) section 14.6 [holding client assets in trust];

(i) section 14.8 [securities subject to a safekeeping agreement];

(j) section 14.9 [securities not subject to a safekeeping agreement];

(k) section 14.12 [content and delivery of trade confirmation].

(3) Subsections (1) and (2) do not apply in Québec.

(4) In Québec, the requirements listed in subsection (1) do not apply to a mutual fund dealer to the extent equivalent requirements to those listed in subsection (1) are applicable to the mutual fund dealer under the regulations in Québec.

36. Section 10.6 is amended

(a) in the heading by adding "or proceeding" after "hearing", and

(b) by adding "or proceeding" after "hearing".

37. Subsection 11.2 (2) is replaced with the following:

(2) A registered firm must designate an individual under subsection (1) who is one of the following:

(a) the chief executive officer of the registered firm or, if the firm does not have a chief executive officer, an individual acting in a capacity similar to a chief executive officer;

(b) the sole proprietor of the registered firm;

(c) the officer in charge of a division of the registered firm, if the activity that requires the firm to register occurs only within the division and the firm has significant other business activities.

38. The heading of section 11.4 is amended by replacing "board" with "the board of directors".

39. Subsection 11.6(1) and (2) are replaced with the following:

(1) A registered firm must keep a record that it is required to keep under securities legislation

(a) for 7 years from the date the record is created,

(b) in a safe location and in a durable form, and

(c) in a manner that permits it to be provided to the regulator or, in Québec, the securities regulatory authority in a reasonable period of time,

(2) A record required to be provided to the regulator, or, in Québec, the securities regulatory authority must be provided in a format that is capable of being read by the regulator or the securities regulatory authority.

40. The note to s. 11.6 is amended by replacing "require" with "required".

41. Section 11.9 is replaced with the following:

11.9 Registrant acquiring a registered firm's securities or assets

(1) A registrant must give the regulator or, in Québec, the securities regulatory authority written notice in accordance with subsection (2) if it proposes to acquire any of the following:

(a) beneficial ownership of, or direct or indirect control or direction over, a security of a registered firm;

(b) beneficial ownership of, or direct or indirect control or direction over, a security of a person or company of which a registered firm is a subsidiary;

(c) all or a substantial part of the assets of a registered firm.

(2) The notice required under subsection (1) must be delivered to the regulator or, in Québec, the securities regulatory authority at least 30 days before the proposed acquisition and must include all relevant facts regarding the acquisition sufficient to enable the regulator or the securities regulatory authority to determine if the acquisition is

(a) likely to give rise to a conflict of interest,

(b) likely to hinder the registered firm in complying with securities legislation,

(c) inconsistent with an adequate level of investor protection, or

(d) otherwise prejudicial to the public interest.

(3) Subsection (1) does not apply to the following:

(a) a proposed acquisition if the beneficial ownership of, or direct or indirect control or direction over, the person or company whose security is to be acquired will not change;

(b) a registrant who, alone or in combination with any other person or company, proposes to acquire securities that, together with the securities already beneficially owned, or over which direct or indirect control or direction is already exercised, do not exceed more than 10% of any class or series of securities.

(4) Except in Ontario and British Columbia, if, within 30 days of the regulator's, or, in Québec, the securities regulatory authority's receipt of a notice under subsection (1), the regulator or the securities regulatory authority notifies the registrant making the acquisition that the regulator or the securities regulatory authority objects to the acquisition, the acquisition must not occur until the regulator or the securities regulatory authority approves it.

(5) In Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1)(a) or (c), the regulator notifies the registrant making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(6) Following receipt of a notice of objection under subsection (4) or (5), the person or company who submitted the notice to the regulator or, in Québec, the securities regulatory authority may request an opportunity to be heard on the matter.

42. Section 11.10 is replaced with the following:

11.10 Registered firm whose securities are acquired

(1) A registered firm must give the regulator or, in Québec, the securities regulatory authority written notice in accordance with subsection (2) if it knows or has reason to believe that any person or company, alone or in combination with any other person or company, is about to acquire, or has acquired, beneficial ownership of, or direct or indirect control or direction over, 10% or more of any class or series of voting securities of any of the following:

(a) the registered firm;

(b) a person or company of which the registered firm is a subsidiary.

(2) The notice required under subsection (1) must,

(a) be delivered to the regulator or, in Québec, the securities regulatory authority as soon as possible,

(b) include the name of each person or company involved in the acquisition, and

(c) after the registered firm has applied reasonable efforts to gather all relevant facts, include facts regarding the acquisition sufficient to enable the regulator or the securities regulatory authority to determine if the acquisition is

(i) likely to give rise to a conflict of interest,

(ii) likely to hinder the registered firm in complying with securities legislation,

(iii) inconsistent with an adequate level of investor protection, or

(iv) otherwise prejudicial to the public interest.

(3) This section does not apply to an acquisition in which the beneficial ownership of, or direct or indirect control or direction over, a registered firm does not change.

(4) This section does not apply if notice of the acquisition was provided under section 11.9 [registrant acquiring a registered firm's securities or assets].

(5) Except in British Columbia and Ontario, if, within 30 days of the regulator's or, in Québec, the securities regulatory authority's receipt of a notice under subsection (1), the regulator or the securities regulatory authority notifies the person or company making the acquisition that the regulator or the securities regulatory authority objects to the acquisition, the acquisition must not occur until the regulator or the securities regulatory authority approves it.

(6) In Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1)(a), the regulator notifies the person or company making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(7) Following receipt of a notice of objection under subsection (5) or (6), the person or company proposing to make the acquisition may request an opportunity to be heard on the matter.

43. Section 12.1 is replaced with the following:

12.1 Capital requirements

(1) If, at any time, the excess working capital of a registered firm, as calculated in accordance with Form 31-103F1 Calculation of Excess Working Capital, is less than zero, the registered firm must notify the regulator or, in Québec, the securities regulatory authority as soon as possible.

(2) The excess working capital of a registered firm, as calculated in accordance with Form 31-103F1 Calculation of Excess Working Capital, must not be less than zero for 2 consecutive days.

(3) For the purpose of completing Form 31-103F1 Calculation of Excess Working Capital, the minimum capital is

(a) $25,000, for a registered adviser that is not also a registered dealer or a registered investment fund manager,

(b) $50,000, for a registered dealer that is not also a registered investment fund manager, and

(c) $100,000, for a registered investment fund manager.

(4) Paragraph (3)(c) does not apply to a registered investment fund manager that is exempt from the dealer registration requirement under section 8.6 [investment fund trades by adviser to managed account] in respect of all investment funds for which it acts as adviser.

(5) This section does not apply to a registered firm that is a member of IIROC and is registered as an investment fund manager if all of the following apply:

(a) the firm has a minimum capital of not less than $100,000 as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report;

(b) the firm notifies the regulator or, in Québec, the securities regulatory authority as soon as possible if, at any time, the firm's risk adjusted capital, as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report is less than zero;

(c) the risk adjusted capital of the firm, as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report, is not less than zero for 2 consecutive days.

(6) This section does not apply to a mutual fund dealer that is a member of the MFDA if it is also registered as an exempt market dealer, a scholarship plan dealer or an investment fund manager and if all of the following apply:

(a) the firm has a minimum capital, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report, of not less than

(i) $50,000, if the firm is registered as an exempt market dealer or scholarship plan dealer,

(ii) $100,000, if the firm is registered as an investment fund manager;

(b) the firm notifies the regulator or, in Québec, the securities regulatory authority as soon as possible if, at any time, the firm's risk adjusted capital, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report is less than zero;

(c) the risk adjusted capital of the firm, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report, is not less than zero for 2 consecutive days.

44. Section 12.2 is amended

(a) by replacing the heading with "Notifying the regulator or the securities regulatory authority of a subordination agreement".

(b) by adding "or, in Québec, the securities regulatory authority" after "regulator", and

(c) by replacing "5 days" with "10 days".

45. Subsection 12.3(2) is amended by deleting "and".

46. Subsections 12.4(2) and (3) are amended by deleting "and" wherever it occurs after "Appendix A".

47. Subsection 12.5 (2) is amended by deleting "and" after "Appendix A".

48. Section 12.7 is amended by

(a) Replacing the heading with "Notifying the regulator or the securities regulatory authority of a change, claim or cancellation".

(b) by adding "or, in Québec, the securities regulatory authority" after "regulator".

49. Section 12.8 is replaced with the following:

12.8 Direction by the regulator or the securities regulatory authority to conduct an audit or review

A registered firm must direct its auditor in writing to conduct any audit or review required by the regulator or, in Québec, the securities regulatory authority during its registration and must deliver a copy of the direction to the regulator or the securities regulatory authority

(a) with its application for registration, and

(b) no later than the 10th day after the registered firm changes its auditor.

50. Section 12.10 is amended in subsections (1) and (2) by adding "or, in Québec, the securities regulatory authority" after "regulator".

51. Subsection 12.11(1) and (2) is amended by adding "or, in Québec, the securities regulatory authority" after "regulator".

52. Section 12.12 is amended

(a) by adding "or, in Québec, the securities regulatory authority" after "regulator" wherever the expression occurs.

(b) by adding, after section (2), the following:

(2.1) If a registered firm is a member of the MFDA and is registered as an exempt market dealer or scholarship plan dealer, the firm is exempt from paragraphs (1)(b) and (2)(b) if all of the following apply:

(a) the firm has a minimum capital of not less than $50,000 as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report;

(b) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 90th day after the end of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any;

(c) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 30th day after the end of the first, second and third interim period of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the interim period and as at the end of the immediately preceding month, if any.

(c) in subsection (3) by adding "unless it is also registered in another category" after "exempt market dealer".

53. Section 12.13 is amended by adding "or, in Québec, the securities regulatory authority" after "regulator".

54. Section 12.14 is amended

(a) by adding "or, in Québec, the securities regulatory authority" after "regulator" wherever the expression occurs;

(b) by adding, after subsection (3), the following:

(4) If a registered firm is a member of IIROC and is registered as an investment fund manager, the firm is exempt from paragraphs (1)(b) and (2)(b) if

(a) the firm has a minimum capital of not less than $100,000, as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report;

(b) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed IIROC Form 1 Joint Regulatory Financial Questionnaire and Report, no later than the 90th day after the end of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any, and

(c) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed IIROC Form 1 Joint Regulatory Financial Questionnaire and Report, no later than the 30th day after the end of the first, second and third interim period of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the interim period and as at the end of the immediately preceding month, if any.

(5) If a registered firm is a member of the MFDA and is registered as an investment fund manager, the firm is exempt from paragraphs (1)(b) and (2)(b) if

(a) the firm has a minimum capital of not less than $100,000, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report,

(b) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 90th day after the end of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any, and

(c) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 30th day after the end of the first, second and third interim period of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the interim period and as at the end of the immediately preceding month, if any.

55. Section 13.1 is amended by adding "an investment fund manager in respect of its activities as" after "apply to".

56. Section 13.2 is amended

(a) in subsection (3) by deleting "under paragraph (2)(a)",

(b) in subparagraph (3)(b)(i) by replacing "10%" with "25%", and

(c) by adding the following after subsection (6):

(7) Paragraph (2)(b) does not apply to a registrant in respect of a client for which the registrant only trades securities referred to in paragraphs 7.1(2)(b) and 7.1(2)(c).

57. Paragraph 13.6 (b) is amended by adding ", or is managed by an affiliate of," after "affiliate of".

58. Section 13.8 is replaced with the following:

Permitted referral arrangements

13.8 A registered firm, or a registered individual whose registration is sponsored by the registered firm, must not participate in a referral arrangement with another person or company unless,

(a) before a client is referred by or to the registrant, the terms of the referral arrangement are set out in a written agreement between the registered firm and the person or company;

(b) the registered firm records all referral fees, and

(c) the registrant ensures that the information prescribed by subsection 13.10(1) [disclosing referral arrangements to clients] is provided to the client in writing before the party receiving the referral either opens an account for the client or provides services to the client.

59. Section 13.9 is amended by

(a) replacing "registrant that refers" with "registered firm, or a registered individual whose registration is sponsored by the registered firm, must not refer",

(b) replacing "must take" with "unless the firm first takes", and

(c) deleting "himself, herself, or".

60. Subsection 13.10 (1) is amended

(a) in paragraph (a) by replacing "referral arrangement" with "agreement referred to in paragraph 13.8(a)",

(b) in paragraph (b) by replacing "referral arrangement" with "agreement", and

(c) in paragraph (c) by replacing "referral arrangement" with "agreement".

61. Section 13.12 is amended by adding the following:

(2) Notwithstanding subsection (1), an investment fund manager may lend money on a short term basis to an investment fund it manages, if the loan is for the purpose of funding redemptions of its securities or meeting expenses incurred by the investment fund in the normal course of its business.

62. Subsection 13.13 (2) is amended by

(a) adding "one of the following applies" after "if",

(b) repealing paragraph (b).

63. Section 13.14 is replaced with the following:

13.14 Application of this Division

(1) This Division does not apply to an investment fund manager in respect of its activities as an investment fund manager.

(2) In Québec, a registered firm is deemed to comply with this Division if it complies with sections 168.1.1 to 168.1.3 of the Securities Act (Québec).

64. Section 14.1 is replaced with the following:

14.1 Investment fund managers exempt from Part 14

14.1 Other than sections 14.6 [holding client assets in trust], 14.12(5) [content and delivery of trade confirmation] and 14.14 [account statements], this Part does not apply to an investment fund manager in respect of its activities as an investment fund manager.

65. Subsection 14.2 (2) is amended

(a) by replacing paragraph (j) with the following:

(j) If section 13.16 applies to the registered firm, disclosure that independent dispute resolution or mediation services are available at the registered firm's expense, to resolve any dispute that might arise between the client and the firm about any trading or advising activity of the firm or one of its representatives;and

(b) in paragraph (k) by adding "registered" after "that the".

66. Section 14.5 is replaced with the following:

14.5 Notice to clients by non-resident registrants

(1) A registered firm whose head office is not located in the local jurisdiction must provide a client in the local jurisdiction with a statement in writing disclosing the following:

(a) the firm is not resident in the local jurisdiction;

(b) the jurisdiction in Canada or the foreign jurisdiction in which the head office or the principal place of business of the firm is located;

(c) all or substantially all of the assets of the firm may be situated outside the local jurisdiction;

(d) there may be difficulty enforcing legal rights against the firm because of the above;

(e) the name and address of the agent for service of process of the firm in the local jurisdiction.

(2) This section does not apply to a registered firm whose head office is in Canada if the firm is registered in the local jurisdiction.

67. Section 14.12 is amended

(a) in subsection (1) by replacing "Subject to subsection (2), a" with "A" and by adding "or, if the client consents in writing, to a registered adviser acting for the client," after "deliver to the client",

(b) by replacing subsection (3) with the following:

(3) Paragraph (1)(h) does not apply if all of the following apply:

(a) the security is a security of a mutual fund that is established and managed by the registered dealer or by an affiliate of the registered dealer, in its capacity as investment fund manager of the mutual fund;

(b) the names of the dealer and the mutual fund are sufficiently similar to indicate that they are affiliated or related., and

(c) by adding the following after subsection (4):

(5) A registered investment fund manager that has executed a redemption order received directly from a security holder must promptly deliver to the security holder a written confirmation of the redemption, setting out the following:

(a) the quantity and description of the security redeemed;

(b) the price per security received by the client;

(c) the commission, sales charge, service charge and any other amount charged in respect of the redemption;

(d) the settlement date of the redemption.

(6) Section 14.12 (5) does not apply to trades in a security of an investment fund made on reliance on section 8.6.

68. Section 14.13 is amended

(a) in the heading by replacing "Semi-annual confirmations" with "Confirmations", and

(b) by repealing paragraph (d).

69. Section 14.14 is amended

(a) in the heading by replacing "Client" with "Account",

(b) in subsection (2) by deleting ", other than a mutual fund dealer," after "registered dealer",

(c) by adding the following after subsection (2):

(2.1) Subsection (2) does not apply to a mutual fund dealer in connection with its activities as a dealer in respect of the securities listed in section 7.1(2)(b).

(d) by adding the following after subsection (3):

(3.1) If there is no dealer of record for a security holder on the records of a registered investment fund manager, the investment fund manager must deliver a statement to the security holder at least once every 12 months,

(e) by replacing subsection (4) with the following:

(4) A statement delivered under subsection (1), (2), (3) or (3.1) must include all of the following information for each transaction made for the client or security holder during the period covered by the statement:

(a) the date of the transaction;

(b) the type of transaction;

(c) the name of the security;

(d) the number of securities;

(e) the price per security;

(f) the total value of the transaction.

(f) by replacing subsection (5) with the following:

(5) A statement delivered under subsection (1), (2), (3) or (3.1) must include all of the following information about the client's or security holder's account as at the end of the period for which the statement is made:

(a) the name and quantity of each security in the account;

(b) the market value of each security in the account;

(c) the total market value of each security position in the account;

(d) any cash balance in the account;

(e) the total market value of all cash and securities in the account,and

(g) by adding the following after subsection (5):

(6) Subsections (1) and (2) do not apply to a scholarship plan dealer if both of the following apply:

(a) the dealer is not registered in another dealer or adviser category;

(b) the dealer delivers to the client a statement at least once every 12 months that provides the information in subsections (4) and (5).

70. Subsection 15.1 is amended by adding "in Québec" after "regulator".

71. Subsection 16.4 is amended

(a) in paragraph (1)(b) by adding "or, in Québec, the securities regulatory authority" after "regulator";

(b) in subsection (3) by adding "a" after "dealer or".

72. Subsection 16.5(1) is replaced with the following

(1) A person or company is not required to register in the local jurisdiction as an investment fund manager if it is registered, or has applied for registration, as an investment fund manager in the jurisdiction of Canada in which its head office is located.

(2) Subsection (1) is repealed on September 28, 2012.

73. Subsection 16.6(2) is replaced with the following

(2) Subsection (1) is repealed on September 28, 2012.

74. Subsections 16.7(3) and (4) are amended by adding "or, in Québec, the securities regulatory authority" after "regulator" wherever this expression occurs.

75. Subsection 16.8(b) is amended by adding "or, in Québec, the securities regulatory authority" after "regulator".

76. Subsection 16.9 is amended

(a) in paragraph (1)(b), by adding "or, in Québec, the securities regulatory authority" after "regulator", and

(b) in subsection (2), by adding "in a jurisdiction of Canada" after "compliance officer".

77. Subsection 16.10 (1) is amended by adding "in a jurisdiction of Canada" after "compliance officer".

78. Subsection 16.16(1) is amended

(a) by adding "in a jurisdiction of Canada" after "registered firm", and

(b) in subsection (2) by replacing "2 years after this Instrument comes into force" with "on September 28, 2012".

79. Section 16.17 is replaced with the following:

16.17 Account statements -- mutual fund dealers

(1) Section 14.14 [account statements] does not apply to a person or company that was, on September 28, 2009, either of the following:

(a) a member of the MFDA;

(b) a mutual fund dealer in Québec, unless it was also a portfolio manager in Québec.

(2) Subsection (1) is repealed on September 28, 2011.

80. Form 31-103F1 is replaced with the following:

FORM 31-103F1 CALCULATION OF EXCESS WORKING CAPITAL

____________________

Firm Name

Capital Calculation

(as at ____________________ with comparative figures as at ____________________)

Component

Current period

Prior period

 

1.

Current assets

__________

__________

 

2.

Less current assets not readily convertible into cash (e.g., prepaid expenses)

__________

__________

 

3.

Adjusted current assets

__________

__________

Line 1 minus line 2 =

 

4.

Current liabilities

__________

__________

 

5.

Add 100% of long-term related party debt unless the firm and the lender have executed a subordination agreement in the form set out in Appendix B and the firm has delivered a copy of the agreement to the regulator or, in Québec, the securities regulatory authority

__________

__________

 

6.

Adjusted current liabilities

__________

__________

Line 4 plus line 5 =

 

7.

Adjusted working capital

__________

__________

Line 3 minus line 6 =

 

8.

Less minimum capital

__________

__________

 

9.

Less market risk

__________

__________

 

10.

Less any deductible under the bonding or insurance policy required under Part 12 of National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations

__________

__________

 

11.

Less Guarantees

__________

__________

 

12.

Less unresolved differences

__________

__________

 

13.

Excess working capital

__________

__________

Notes:

This form must be prepared using the accounting principles that you use to prepare your financial statements in accordance with National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards. Section 12.1 of Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations provides further guidance in respect of these accounting principles.

Line 5. Related-party debt - Refer to the CICA Handbook for the definition of "related party" for publicly accountable enterprises.

Line 8. Minimum Capital - The amount on this line must be not less than (a) $25,000 for an adviser and (b) $50,000 for a dealer. For an investment fund manager, the amount must be not less than $100,000 unless subsection 12.1(4) applies.

Line 9. Market Risk - The amount on this line must be calculated according to the instructions set out in Schedule 1 to this Form.

Line 11. Guarantees - If the registered firm is guaranteeing the liability of another party, the total amount of the guarantee must be included in the capital calculation. If the amount of a guarantee is included in the firm's statement of financial position as a current liability and is reflected in line 4, do not include the amount of the guarantee on line 11.

Line 12. Unresolved differences - Any unresolved differences that could result in a loss from either firm or client assets must be included in the capital calculation. The examples below provide guidance as to how to calculate unresolved differences:

(i) If there is an unresolved difference relating to client securities, the amount to be reported on Line 12 will be equal to the fair value of the client securities that are short, plus the applicable margin rate for those securities.

(ii) If there is an unresolved difference relating to the registrant's investments, the amount to be reported on Line 12 will be equal to the fair value of the investments (securities) that are short.

(iii) If there is an unresolved difference relating to cash, the amount to be reported on Line 12 will be equal to the amount of the shortfall in cash.

Please refer to section 12.1 of Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations for further guidance on how to prepare and file this form.

- - - - - - - - - - - - - - - - - - - -

Management Certification

Registered Firm Name: ____________________

We have examined the attached capital calculation and certify that the firm is in compliance with the capital requirements as at ____________________.

Name and Title
Signature
Date
1.
____________________
____________________
____________________
____________________
 
2.
____________________
____________________
____________________
____________________

- - - - - - - - - - - - - - - - - - - -

Schedule 1 of Form 31-103F1 Calculation of Excess Working Capital

(calculating line 9 [market risk])

For purposes of completing this form:

(1) "Fair value" means the value of a security determined in accordance with Canadian GAAP applicable to publicly accountable enterprises;

(2) For each security whose value is included in line 1, Current Assets, multiply the fair value of the security by the margin rate for that security set out below. Add up the resulting amounts for all of the securities you hold. The total is the "market risk" to be entered on line 9.

(a) Bonds, Debentures, Treasury Bills and Notes

(i) Bonds, debentures, treasury bills and other securities of or guaranteed by the Government of Canada, of the United Kingdom, of the United States of America and of any other national foreign government (provided such foreign government securities are currently rated Aaa or AAA by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively), maturing (or called for redemption):

within 1 year:
1% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
1 % of fair value
over 3 years to 7 years:
2% of fair value
over 7 years to 11 years:
4% of fair value
over 11 years:
4% of fair value

(ii) Bonds, debentures, treasury bills and other securities of or guaranteed by any jurisdiction of Canada and obligations of the International Bank for Reconstruction and Development, maturing (or called for redemption):

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
3 % of fair value
over 3 years to 7 years:
4% of fair value
over 7 years to 11 years:
5% of fair value
over 11 years:
5% of fair value

(iii) Bonds, debentures or notes (not in default) of or guaranteed by any municipal corporation in Canada or the United Kingdom maturing:

within 1 year:
3% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
5 % of fair value
over 3 years to 7 years:
5% of fair value
over 7 years to 11 years:
5% of fair value
over 11 years:
5% of fair value

(iv) Other non-commercial bonds and debentures, (not in default): 10% of fair value

(v) Commercial and corporate bonds, debentures and notes (not in default) and non-negotiable and non-transferable trust company and mortgage loan company obligations registered in the registered firm's name maturing:

within 1 year:
3% of fair value
over 1 year to 3 years:
6 % of fair value
over 3 years to 7 years:
7% of fair value
over 7 years to 11 years:
10% of fair value
over 11 years:
10% of fair value

(b) Bank Paper

Deposit certificates, promissory notes or debentures issued by a Canadian chartered bank (and of Canadian chartered bank acceptances) maturing:

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year:
apply rates for commercial and corporate bonds, debentures and notes

(c) Acceptable foreign bank paper

Deposit certificates, promissory notes or debentures issued by a foreign bank, readily negotiable and transferable and maturing:

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year:
apply rates for commercial and corporate bonds, debentures and notes

"Acceptable Foreign Bank Paper" consists of deposit certificates or promissory notes issued by a bank other than a Canadian chartered bank with a net worth (i.e., capital plus reserves) of not less than $200,000,000.

(d) Mutual Funds

Securities of mutual funds qualified by prospectus for sale in any jurisdiction of Canada:

(i) 5% of the net asset value per security as determined in accordance with National Instrument 81-106 Investment Fund Continuous Disclosure, where the fund is a money market mutual fund as defined in National Instrument 81-102 Mutual Funds; or

(ii) the margin rate determined on the same basis as for listed stocks multiplied by the net asset value per security of the fund as determined in accordance with National Instrument 81-106 Investment Fund Continuous Disclosure.

(e) Stocks

In this paragraph, "securities" includes rights and warrants and does not include bonds and debentures.

(i) On securities including investment fund securities, rights and warrants listed on any exchange in Canada or the United States of America:

Long Positions -- Margin Required

Securities selling at $2.00 or more -- 50% of fair value

Securities selling at $1.75 to $1.99 -- 60% of fair value

Securities selling at $1.50 to $1.74 -- 80% of fair value

Securities selling under $1.50 -- 100% of fair value

Short Positions -- Credit Required

Securities selling at $2.00 or more -- 150% of fair value

Securities selling at $1.50 to $1.99 -- $3.00 per share

Securities selling at $0.25 to $1.49 -- 200% of fair value

Securities selling at less than $0.25 -- fair value plus $0.25 per shares

(ii) For positions in securities that are constituent securities on a major broadly-based index of one of the following exchanges, 50% of the fair value:

(a) Australian Stock Exchange Limited

(b) Bolsa de Madrid

(c) Borsa Italiana

(d) Copenhagen Stock Exchange

(e) Euronext Amsterdam

(f) Euronext Brussels

(g) Euronext Paris S.A.

(h) Frankfurt Stock Exchange

(i) London Stock Exchange

(j) New Zealand Exchange Limited

(k) Stockholm Stock Exchange

(l) Swiss Exchange

(m) The Stock Exchange of Hong Kong Limited

(n) Tokyo Stock Exchange

(f) Mortgages

(i) For a firm registered in any jurisdiction of Canada except Ontario:

(a) Insured mortgages (not in default): 6% of fair value

(b) Mortgages which are not insured (not in default): 12% of fair value of the loan or the rates set by Canadian financial institutions or Schedule III banks, whichever is greater.

(ii) For a firm registered in Ontario:

(a) Mortgages insured under the National Housing Act (Canada) (not in default): 6% of fair value

(b) Conventional first mortgages (not in default): 12% of fair value of the loan or the rates set by Canadian financial institutions or Schedule III banks, whichever is greater.

- - - - - - - - - - - - - - - - - - - -

If you are registered in Ontario regardless of whether you are also registered in another jurisdiction of Canada, you will need to apply the margin rates set forth in (ii) above.

- - - - - - - - - - - - - - - - - - - -

(g) For all other securities -- 100% of fair value.

81. Form 31-103F2 is replaced with the following:

FORM 31-103F2 SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE

(sections 8.18 [international dealer] and 8.26 [international adviser])

1. Name of person or company ("International Firm"):

2. If the International Firm was previously assigned an NRD number as a registered firm or an unregistered exempt international firm, provide the NRD number of the firm.

3. Jurisdiction of incorporation of the International Firm:

4. Head office address of the International Firm:

5. The name, e-mail address, phone number and fax number of the International Firm's chief compliance officer.

Name:

E-mail address:

Phone:

Fax:

6. Section of National Instrument 31-103 Registration Requirements, Exceptions and Ongoing Registrant Obligations the International Firm is relying on:

[ ] Section 8.18 [international dealer]

[ ] Section 8.26 [international adviser]

[ ] Other

7. Name of agent for service of process (the "Agent for Service"):

8. Address for service of process on the Agent for Service:

9. The International Firm designates and appoints the Agent for Service at the address stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal or other proceeding (a "Proceeding") arising out of or relating to or concerning the International Firm's activities in the local jurisdiction and irrevocably waives any right to raise as a defence in any such proceeding any alleged lack of jurisdiction to bring such Proceeding.

10. The International Firm irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of the local jurisdiction in any Proceeding arising out of or related to or concerning the International Firm's activities in the local jurisdiction.

11. Until 6 years after the International Firm ceases to rely on section 8.18 [international dealer] or section 8.26 [international adviser], the International Firm must submit to the securities regulatory authority

a. a new Submission to Jurisdiction and Appointment of Agent for Service in this form no later than the 30th day before the date this Submission to Jurisdiction and Appointment of Agent for Service is terminated; and

b. an amended Submission to Jurisdiction and Appointment of Agent for Service no later than the 30th day before any change in the name or above address of the Agent for Service.

12. This Submission to Jurisdiction and Appointment of Agent for Service is governed by and construed in accordance with the laws of the local jurisdiction.

Dated: ____________________

____________________

(Signature of the International Firm or authorized signatory)

____________________

(Name and Title of authorized signatory)

Acceptance

The undersigned accepts the appointment as Agent for Service of (Insert name of International Firm) under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service.

Dated: ____________________

____________________

(Signature of Agent for Service or authorized signatory)

____________________

(Name and Title of authorized signatory)

82. Form 31-103F3 is amended by replacing "and Exemptions" with ", Exemptions and Ongoing Registrant Obligations".

83. Appendix B is amended

(a) replacing "and Exemptions" with ", Exemptions and Ongoing Registrant Obligations", and

(b) in section 1 by replacing "owned" with "owed", and

(c) in section 4 by adding "10 days before" after "Securities Regulatory Authority" and by deleting "prior to" after "Securities Regulatory Authority".

84. This instrument comes into force on (insert date) 2011.

 

Appendix E Amending instrument to NI 33-109

APPENDIX E

AMENDMENTS TO NATIONAL INSTRUMENT 33-109 REGISTRATION INFORMATION

1. National Instrument 33-109 Registration Information is amended by this Instrument.

2. Section 1.1 is amended

(a) by deleting the definitions of "NI 31-102" and "NI 31-103", and

(b) in the opening statement of the definition of "permitted individual" by deleting the words "who is not a registered individual and" and in paragraph (a) by replacing "and" with "or".

3. Sections 1.2, 2.1 and 2.2 are amended by replacing "NI 31-102" wherever the expression occurs with "National Instrument 31-102 National Registration Database".

4. Section 2.3 is amended

(a) in subsection (1) by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database" ,

(b) in subsection (2) by replacing "NI 31-103" with "National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations" and "NI 31-102" with "National Instrument 31-102 National Registration Database", and

(c) in paragraph (2)(b) by adding "resigned voluntarily," after "resign,".

5. Section 2.4 is amended by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database".

6. Section 2.5 is amended

(a) in subsection (1) by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database" and "7 days" with "10 days",

(b) in subsection (2), by adding "firm" after "a former sponsoring", and

(c) in paragraph (2)(a) by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database", and

(d) in subparagraph 2(a)(i) by replacing "7 days" with "10 days".

7. Sections 2.6 is amended by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database".

8. Section 3.1 is amended by replacing "7 days" with "10 days" wherever the expression occurs.

9. Section 3.2 is amended by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database" and "7 days" with "10 days".

10. Subsection 4.1 is amended

(a) in subsection (1) by replacing "7 days" with "10 days",

(b) in subsection (3) and (4) by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database", and

(c) by replacing paragraph (4)(b) with the following paragraphs:

(b) the removal or the addition of a category of registration;

(c) the surrender of registration in one or more non-principal jurisdictions."

11. Section 4.2 is amended

(a) in subsection (1) by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database",

(b) in paragraph (1)(b) by deleting "or retirement" and "or the completion or expiry of an employment or agency contract", and

(c) in subsection (2), (3) and (4), by replacing "7 days" wherever the expression occurs with "10 days" and

(d) in subsections (3) and (4), by replacing "person or company" wherever the expression occurs with "registered firm".

12. Subsection 5.1 (1) is amended by adding "sponsoring" after "A".

13. Section 6.2 is amended by replacing "instrument" wherever it occurs with "Instrument" and by replacing "7 days" wherever the expression occurs with "10 days".

14. Section 6.4 is amended by replacing "NI 31-102" with "National Instrument 31-102 National Registration Database".

15. Form 33-109F1 is amended

(a) under "General Instructions" by replacing "person" after "permitted" with "individual" and by adding at the end "or has ceased to act in a registerable activity or as a permitted individual";

(b) under "Terms" by replacing at the end ";" with ".",

(c) under "When to submit the form" by replacing "five business days" with "10 days",

(d) in Item 5 by replacing the instructions above "[For NRD Format only:]" with the following:

Complete Item 5 except where the individual is deceased. In the space below:

• state the reason(s) for the cessation / termination and

• provide details if the answer to any of the following questions is "Yes".

(e) in Item 5 under "[For NRD Format only:]" by replacing "completed temporary employment contract, retired or" with "individual is"; and

(f) by repealing Item 6 and Schedule A.

16. Form 33-109F2 is amended

(a) in the heading by replacing "section 4.2 or 2.2(2) or 2.5(2)" with "section 2.2(2), 2.4, 2.6(2) or 4.1(4)",

(b) by replacing Item 2 with the following:

Item 2 Registration jurisdictions

1. Are you filing this form under the passport system / interface for registration?

Choose "no" if you are registered in:

(a) only one jurisdiction in Canada

(b) more than one jurisdiction in Canada and you are requesting a surrender in a non-principal jurisdiction or jurisdictions, but not in your principal jurisdiction.

(c) more than one jurisdiction in Canada and you are requesting a change only in your principal jurisdiction; and

(c) by replacing Item 4 with the following:

Item 4 Adding categories

1. Categories

What categories are you seeking to add?

____________________

2. Professional liability insurance (Québec mutual fund dealers and Québec scholarship plan dealers)

If you are seeking registration as a representative of a mutual fund dealer or of a scholarship plan dealer in Québec, are you covered by your sponsoring firm's professional liability insurance?

Yes
[ ]
No
[ ]

If "No", state:

The name of your insurer ____________________

Your policy number ____________________

3. Relevant securities industry experience

If you have not been registered in the last 36 months and you passed the required examination more than 36 months ago, do you consider that you have gained 12 months of relevant securities industry experience during the 36 month period?

Yes
[ ]
No
[ ]
N/A
[ ]

If you are an individual applying for IIROC approval, select "Not Applicable" above.

If "yes", complete Schedule A.

(d) by replacing Schedule A with the following:

SCHEDULE A

Relevant securities industry experience (Item 4)

Describe your responsibilities in areas relating to the category you are applying for, including the title(s) you have held, as well as start and end dates:

____________________

____________________

____________________

What is the percentage of your time devoted to these activities?

_____ %

Indicate the continuing education activities which you have participated in during the last 36 months and which are relevant to the category of registration you are applying for:

____________________

____________________

____________________

____________________

(e) by adding the following after Schedule A:

Schedule B

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

17. Form 33-109F3 is amended by replacing Schedule A with the following:

Schedule A

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

18. Form 33-109F4 is amended

(a) in the definition of "Approved person" under "Terms" by replacing "member of the IIROC (Member)" with "member (Member) of the Investment Industry Regulatory Organization of Canada (IIROC)",

(b) in the paragraphs "NRD format" and "Format, other than NRD format", under the heading "How to submit this form", by adding "with securities regulation experience" after "legal adviser",

(c) in section 1 of Item 8 by

(i) replacing the title with the following:

"Course, examination or designation information and other education",

(ii) replacing "course and" with "course," and by adding "and designation" in the first sentence of item 1, after "examination", and

(iii) replacing "course or" with "course," and by adding "or designation" in the second sentence of item 1, after "examination";

(d) in section 2 of Item 8 by adding the following after "Advocis (formerly CAIFA): ____________________":

RESP Dealers Association of Canada: ____________________

Other: ____________________

(e) in section 3 of Item 8 by adding ", designation" after the word "examination";

(f) in Item 8 by adding the following after section 3:

4. Relevant securities industry experience

If you are an individual applying for IIROC approval, select "Not Applicable below".

If you have not been registered in the last 36 months and you passed the required examination more than 36 months ago, do you consider that you have gained 12 months of relevant securities industry experience during the 36 month period?

Yes
[ ]
No
[ ]
N/A
[ ]

If "yes", complete Schedule F.

(g) in section 4 of Item 9 by adding "supervisor or" after "Name of".

(h) in Item 14 by replacing "Immigration Act" with "Immigration and Refugee Protection Act", and "Young Offenders Act" wherever the expression occurs with "former Young Offenders Act".

(i) in Item 1.3 of Schedule A to Form 33-109F4 is amended by adding the following after "No ":

N/A
[ ]

(j) in Schedule C by replacing "Investment Industry Regulatory Organization of Canada" with "IIROC".

(k) by replacing Schedule E with the following:

SCHEDULE E

Proficiency (Item 8)

Item 8.1 Course, examination or designation information and other education

Course, examination, designation or other education
Date completed (YYYY/MM/DD)
Date exempted (YYYY/MM/DD)
Regulator/securities regulatory authority granting the exemption
 
__________
__________
__________
__________
 
__________
__________
__________
__________
 
__________
__________
__________
__________
 
__________
__________
__________
__________

If you have listed the CFA Charter in Item 8.1, please indicate by checking the box below whether you are a current member of the CFA Institute permitted to use the CFA Charter.

Yes
[ ]
No
[ ]

If "no", please explain why you no longer hold this designation:

____________________

____________________

____________________

If you have listed the CIM designation in Item 8.1, please indicate by checking the box below whether you are currently permitted to use the CIM designation.

Yes
[ ]
No
[ ]

If "no", please explain why you no longer hold this designation:

____________________

____________________

____________________

(l) in Schedule F

(i) in the heading by replacing "Item 8.3" with "Items 8.3 and 8.4",

(ii) by adding the word ", designation" after the word "examination" wherever it occurs, and

(iii) by adding the following after Item 8.3:

Item 8.4 Relevant securities industry experience

Describe your responsibilities in areas relating to the category you are applying for, including the title(s) you have held, as well as the start and end dates:

____________________

____________________

____________________

What is the percentage of your time devoted to these activities?

_____ %

Indicate the continuing education activities which you have participated in during the last 36 months and which are relevant to the category of registration you are applying for:

____________________

____________________

____________________

(m) in Schedule G by replacing section 5 with the following:

5. Conflicts of interest

If you have more than one employer or are engaged in business related activities:

A. Disclose any potential for confusion by clients and any potential for conflicts of interest arising from your multiple employment or business related activities or proposed business related activities.

____________________

____________________

____________________

B. Indicate whether or not any of your employers or organizations where you engage in business related activities are listed on an exchange.

____________________

____________________

____________________

C. Confirm whether the firm has procedures for minimizing potential conflicts of interest and if so, confirm that you are aware of these procedures.

____________________

____________________

____________________

D. State the name of the person at your sponsoring firm who has reviewed and approved your multiple employment or business related activities or proposed business related activities

____________________

E. If you do not perceive any conflicts of interest arising from this employment, explain why.

____________________

____________________

____________________

(n) by replacing Schedule O with the following:

Schedule O

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
800, square Victoria, 22e étage
Suite 300, 85 Charlotte Street
C.P. 246, tour de la Bourse
Saint John, NB E2L 2J2
Montréal (Québec) H4Z 1G3
Attention: Director, Regulatory Affairs
Attention: Responsable de l'accès à l'information
Telephone: (506) 658-3060
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

19. Form 33-109F5 is amended

(a) under "How to submit this form" by adding the following after subparagraph b) of the second paragraph:

Name of firm ____________________

Registration categories ____________________

NRD number (firm) ____________________

(b) in Item 1 by adding the following under " Form 33-109F6":

"If submitting changes to Form 33-109F6, please attach a blackline of the amended sections of the form."; and

(c) in Item 5 by deleting the line "name of firm".

(d) by replacing Schedule A with the following:

Schedule A

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
800, square Victoria, 22e étage
Suite 300, 85 Charlotte Street
C.P. 246, tour de la Bourse
Saint John, NB E2L 2J2
Montréal (Québec) H4Z 1G3
Attention: Director, Regulatory Affairs
Attention: Responsable de l'accès à l'information
Telephone: (506) 658-3060
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

20. Form 33-109F6 is amended

(a) in the definition of "NI 31-103" by replacing "and Exemptions" with ", Exemptions and Ongoing Registrant Obligations",

(b) under "Definitions" by adding the following definitions in alphabetical order:

"Foreign jurisdiction -- see National Instrument 14-101 Definitions";

"Jurisdiction or jurisdiction of Canada -- see National Instrument 14-101 Definitions".

"NI 52-107 -- National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards"

(c) under "Contents of the form" by replacing "Alberta and Manitoba" with "Alberta, Manitoba and New Brunswick",

(d) in the next to last paragraph under "How to complete and submit the form" by deleting "and fees",

(e) under "How to complete and submit the form" by adding the following paragraph before the last paragraph:

"In most of this form, answers are required to questions which apply only to Canadian provinces and territories; you will find that the questions are referenced to "jurisdictions" or "jurisdiction of Canada". These refer to all provinces and territories of Canada. However, the questions in Part 4 -- Registration History and Part 7 -- Regulatory Action are to be answered in respect of any jurisdiction in the world."; and

(f) in section 1.3 of Part 1 by

(i) replacing "Questions 1.1, 1.2, 1.4, 1.5, 2.4, and Part 9" with "Questions 1.1, 1.2, 1.4, 1.5, 2.4, 3.9, 5.4, 5.6*, and Part 9",

(ii) replacing "Questions 1.1, 1.2, 1.4, 1.5, 5.1, 5.4, 5.5, 5.6, 5.7, 5.8, Part 6 and Part 9" with "Questions 1.1, 1.2, 1.4, 1.5, 3.1, 5.1, 5.4, 5.5*, 5.6*, 5.7, 5.8, Part 6 and Part 9", and

(iii) adding the following after "Part 6 and Part 9":

"*If the firm is adding Québec as a jurisdiction for registration in the category of mutual fund dealer or scholarship plan dealer, complete question 5.6.",

(g) in the table in section 1.4 under "Jurisdiction" by replacing "NT" with "NS" and "NS" with "NT",

(h) in the table in section 1.5 under "Jurisdiction(s) where the firm has applied for the exemption" by replacing "NT" with "NS" and "NS" with "NT",

(i) in the table in paragraph 2.2(b) of Part 2 by replacing "NT" with "NS" and "NS" with "NT", and

(j) in sections 2.5 and 2.6 by replacing the word "Title" with:

- - - - - - - - - - - - - - - - - - - -

Officer title

- - - - - - - - - - - - - - - - - - - -

Telephone number

- - - - - - - - - - - - - - - - - - - -

E-mail address

- - - - - - - - - - - - - - - - - - - -

(k) in section 3.3 in Part 3 by replacing "Alberta or Manitoba" with "Alberta, Manitoba or New Brunswick",

(l) by replacing the first sentence of Part 4 with the following:

"The questions in Part 4 apply to any jurisdiction and any foreign jurisdiction."

(m) in section 4.5 by deleting the word "ever" ,

(n) by replacing section 5.1 of Part 5 with the following:

5.1 Calculation of excess working capital

Attach the firm's calculation of excess working capital.

• Investment dealers must use the capital calculation form required by the Investment Industry Regulatory Organization of Canada (IIROC).

• Mutual fund dealers must use the capital calculation form required by the Mutual Fund Dealers Association of Canada (MFDA), except for mutual fund dealers registered in Québec only

• Firms that are not members of either IIROC or the MFDA must use Form 31-103F1 Calculation of Excess Working Capital. See Schedule C.

(o) in section 5.4 by replacing "NT" with "NS", and "NS" with "NT",

(p) in section 5.5 by adding the following after "Annual aggregate coverage ($)":

Total coverage ($)

(q) in section 5.5 by replacing "Renewal date" with "Expiry date",

(r) in section 5.6 by adding the following after "Annual aggregate coverage ($)":

Total coverage ($)

and under "Jurisdictions covered:" by replacing "NT" with "NS", and "NS" with "NT",

(s) by replacing section 5.13 with the following:

"(a) Attach, for your most recently completed year, either

(i) non-consolidated audited financial statements; or

(ii) audited financial statements prepared in accordance with section 3.2(3) of NI 52-107.

(b) If the audited financial statements attached for item (a) were prepared for a period ending more than 90 days before the date of this application, also attach an interim financial report for a period of not more than 90 days before the date of this application.

If the firm is a start-up company, you can attach an audited opening statement of financial position instead."

(t) in Part 6

(i) by adding the following before section 6.1 and after "31-103CP":

For guidance regarding whether a firm will hold or have access to client assets see section 12.4 of Companion Policy 31-103CP., and

(ii) in section 6.1 by replacing "does" with "will".

(u) in Part 7 by replacing the first sentence with the following:

"The questions in Part 7 apply to any jurisdiction and any foreign jurisdiction. The information must be provided in respect of the last 7 years."

(v) in section 7.1, by deleting "ever",

(w) in Part 8 by replacing the first paragraph with the following:

"The firm must disclose offences or legal actions under any statute governing the firm and its business activities in any jurisdiction. The information must be provided in respect of the last 7 years."

(x) in section 8.1 by deleting "ever",

(y) by replacing Schedule A with the following:

Schedule A

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

(z) in Schedule B by adding the following under "Address for service of process on the Agent for Service":

Phone number of the Agent for Service:

____________________

(a.1) in paragraphs 7(a) and 7(b) of Schedule B by replacing "7th day" with "10th day",

(b.1) by replacing Schedule C with the following:

FORM 31-103F1 CALCULATION OF EXCESS WORKING CAPITAL

____________________

Firm Name

Capital Calculation

(as at ________________ with comparative figures as at ______________)

Component

Current period

Prior period

 

1.

Current assets

__________

__________

 

2.

Less current assets not readily convertible into cash (e.g., prepaid expenses)

__________

__________

 

3.

Adjusted current assets Line 1 minus line 2 =

__________

__________

 

4.

Current liabilities

__________

__________

 

5.

Add 100% of long-term related party debt unless the firm and the lender have executed a subordination agreement in the form set out in Appendix B and the firm has delivered a copy of the agreement to the regulator or, in Québec, the securities regulatory authority

__________

__________

 

6.

Adjusted current liabilities Line 4 plus line 5 =

__________

__________

 

7.

Adjusted working capital Line 3 minus line 6 =

__________

__________

 

8.

Less minimum capital

__________

__________

 

9.

Less market risk

__________

__________

 

10.

Less any deductible under the bonding or insurance policy required under Part 12 of National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations

__________

__________

 

11.

Less Guarantees

__________

__________

 

12.

Less unresolved differences

__________

__________

 

13.

Excess working capital

__________

__________

Notes:

This form must be prepared using the accounting principles that you use to prepare your financial statements in accordance with National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards. Section 12.1 of Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations provides further guidance in respect of these accounting principles.

Line 5. Related-party debt -- Refer to the CICA Handbook for the definition of "related party" for publicly accountable enterprises.

Line 8. Minimum Capital -- The amount on this line must be not less than (a) $25,000 for an adviser and (b) $50,000 for a dealer. For an investment fund manager, the amount must be not less than $100,000 unless subsection 12.1(4) applies.

Line 9. Market Risk -- The amount on this line must be calculated according to the instructions set out in Schedule 1 to this Form.

Line 11. Guarantees -- If the registered firm is guaranteeing the liability of another party, the total amount of the guarantee must be included in the capital calculation. If the amount of a guarantee is included in the firm's statement of financial position as a current liability and is reflected in line 4, do not include the amount of the guarantee on line 11.

Line 12. Unresolved differences -- Any unresolved differences that could result in a loss from either firm or client assets must be included in the capital calculation. The examples below provide guidance as to how to calculate unresolved differences:

(i) If there is an unresolved difference relating to client securities, the amount to be reported on Line 12 will be equal to the fair value of the client securities that are short, plus the applicable margin rate for those securities.

(ii) If there is an unresolved difference relating to the registrant's investments, the amount to be reported on Line 12 will be equal to the fair value of the investments (securities) that are short.

(iii) If there is an unresolved difference relating to cash, the amount to be reported on Line 12 will be equal to the amount of the shortfall in cash.

Please refer to section 12.1 of Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations for further guidance on how to prepare and file this form.

- - - - - - - - - - - - - - - - - - - -

Management Certification

Registered Firm Name: ____________________

We have examined the attached capital calculation and certify that the firm is in compliance with the capital requirements as at ____________________.

Name and Title
Signature
Date
1.
____________________
____________________
____________________
____________________
 
2.
____________________
____________________
____________________
____________________

- - - - - - - - - - - - - - - - - - - -

 

Schedule 1 of Form 31-103F1 Calculation of Excess Working Capital

(calculating line 9 [market risk])

For purposes of completing this form:

(1) "Fair value" means the value of a security determined in accordance with Canadian GAAP applicable to publicly accountable enterprises;

(2) For each security whose value is included in line 1, Current Assets, multiply the fair value of the security by the margin rate for that security set out below. Add up the resulting amounts for all of the securities you hold. The total is the "market risk" to be entered on line 9.

(a) Bonds, Debentures, Treasury Bills and Notes

(i) Bonds, debentures, treasury bills and other securities of or guaranteed by the Government of Canada, of the United Kingdom, of the United States of America and of any other national foreign government (provided such foreign government securities are currently rated Aaa or AAA by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively), maturing (or called for redemption):

within 1 year:
1% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
1 % of fair value
over 3 years to 7 years:
2% of fair value
over 7 years to 11 years:
4% of fair value
over 11 years:
4% of fair value

(ii) Bonds, debentures, treasury bills and other securities of or guaranteed by any jurisdiction of Canada and obligations of the International Bank for Reconstruction and Development, maturing (or called for redemption):

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
3 % of fair value
over 3 years to 7 years:
4% of fair value
over 7 years to 11 years:
5% of fair value
over 11 years:
5% of fair value

(iii) Bonds, debentures or notes (not in default) of or guaranteed by any municipal corporation in Canada or the United Kingdom maturing:

within 1 year:
3% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
5 % of fair value
over 3 years to 7 years:
5% of fair value
over 7 years to 11 years:
5% of fair value
over 11 years:
5% of fair value

(iv) Other non-commercial bonds and debentures, (not in default): 10% of fair value

(v) Commercial and corporate bonds, debentures and notes (not in default) and non-negotiable and non-transferable trust company and mortgage loan company obligations registered in the registered firm's name maturing:

within 1 year:
3% of fair value
over 1 year to 3 years:
6 % of fair value
over 3 years to 7 years:
7% of fair value
over 7 years to 11 years:
10% of fair value
over 11 years:
10% of fair value

(b) Bank Paper

Deposit certificates, promissory notes or debentures issued by a Canadian chartered bank (and of Canadian chartered bank acceptances) maturing:

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year:
apply rates for commercial and corporate bonds, debentures and notes

(c) Acceptable foreign bank paper

Deposit certificates, promissory notes or debentures issued by a foreign bank, readily negotiable and transferable and maturing:

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year:
apply rates for commercial and corporate bonds, debentures and notes

"Acceptable Foreign Bank Paper" consists of deposit certificates or promissory notes issued by a bank other than a Canadian chartered bank with a net worth (i.e., capital plus reserves) of not less than $200,000,000.

(d) Mutual Funds

Securities of mutual funds qualified by prospectus for sale in any jurisdiction of Canada:

(i) 5% of the net asset value per security as determined in accordance with National Instrument 81-106 Investment Fund Continuous Disclosure, where the fund is a money market mutual fund as defined in National Instrument 81-102 Mutual Funds; or

(ii) the margin rate determined on the same basis as for listed stocks multiplied by the net asset value per security of the fund as determined in accordance with National Instrument 81-106 Investment Fund Continuous Disclosure.

(e) Stocks

In this paragraph, "securities" includes rights and warrants and does not include bonds and debentures.

(i) On securities including investment fund securities, rights and warrants, listed on any exchange in Canada or the United States of America:

Long Positions -- Margin Required

Securities selling at $2.00 or more -- 50% of fair value

Securities selling at $1.75 to $1.99 -- 60% of fair value

Securities selling at $1.50 to $1.74 -- 80% of fair value

Securities selling under $1.50 -- 100% of fair value

Short Positions -- Credit Required

Securities selling at $2.00 or more -- 150% of fair value

Securities selling at $1.50 to $1.99 -- $3.00 per share

Securities selling at $0.25 to $1.49 -- 200% of fair value

Securities selling at less than $0.25 -- fair value plus $0.25 per shares

(ii) For positions in securities that are constituent securities on a major broadly-based index of one of the following exchanges, 50% of the fair value:

(a) Australian Stock Exchange Limited

(b) Bolsa de Madrid

(c) Borsa Italiana

(d) Copenhagen Stock Exchange

(e) Euronext Amsterdam

(f) Euronext Brussels

(g) Euronext Paris S.A.

(h) Frankfurt Stock Exchange

(i) London Stock Exchange

(j) New Zealand Exchange Limited

(k) Stockholm Stock Exchange

(l) Swiss Exchange

(m) The Stock Exchange of Hong Kong Limited

(n) Tokyo Stock Exchange

(f) Mortgages

(i) For a firm registered in any jurisdiction of Canada except Ontario:

(a) Insured mortgages (not in default): 6% of fair value

(b) Mortgages which are not insured (not in default): 12% of fair value of the loan or the rates set by Canadian financial institutions or Schedule III banks, whichever is greater.

(ii) For a firm registered in Ontario:

(a) Mortgages insured under the National Housing Act (Canada) (not in default): 6% of fair value

(b) Conventional first mortgages (not in default): 12% of fair value of the loan or the rates set by Canadian financial institutions or Schedule III banks, whichever is greater.

- - - - - - - - - - - - - - - - - - - -

If you are registered in Ontario regardless of whether you are also registered in another jurisdiction of Canada, you will need to apply the margin rates set forth in (ii) above.

- - - - - - - - - - - - - - - - - - - -

(g) For all other securities -- 100% of fair value.

22. Form 33-109F7 is amended

(a) in section 1 under "General Instructions" by adding "the end of" after "on or before", and by replacing "termination" with "cessation",

(b) in section 3 under "General Instructions" by deleting "dismissed, or was", and adding "resigned voluntarily or was dismissed," after "resign",

(c) in the definition for "you", "your" and "individual" under "Terms" by adding "or their statues as permitted individual" after "registration".

(d) in section 5 of item 5 by deleting "Date on which you will become authorized to act on behalf of the new sponsoring firm as a registered individual or permitted individual ____________________ (YYYY/MM/DD",

(e) in paragraph 2(b) of Item 9 by adding "or resigned voluntarily" after "resign",

(f) in Schedule B by replacing "Investment Industry Regulatory Organization of Canada" with "IIROC",

(g) by replacing section 5 of Schedule D with the following:

5. Conflict of Interest

If you have more than one employer or are engaged in businss related activities:

A: Disclose any potential for confusion by clients and any potential for conflicts of interest arising from your multiple employment or business related activities or proposed business related activities.

____________________

____________________

____________________

B. Indicate whether or not any of your employers or organizations where you engage in business related activities are listed on an exchange.

____________________

____________________

____________________

C. Confirm whether the firm has procedures for minimizing potential conflicts of interest and, if so, confirm that you are aware of these procedures.

____________________

____________________

____________________

D. If you do not perceive any conflicts of interest arising from this employment, explain why.

____________________

____________________

____________________

(h) by replacing Schedule F with the following:

Schedule F

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

23. This Instrument comes into force on (insert date) 2011.

 

National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations

NATIONAL INSTRUMENT 31-103

REGISTRATION REQUIREMENTS, EXEMPTIONS

AND ONGOING REGISTRANT OBLIGATIONS

Part 1 Interpretation

1.1 Definitions of terms used throughout this Instrument

In this Instrument

"Canadian financial institution" has the same meaning as in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions;

"connected issuer" has the same meaning as in section 1.1 of National Instrument 33-105Underwriting Conflicts;

"debt security" has the same meaning as in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions;

"eligible client" means a client of a person or company if any of the following apply:

(a) the client is an individual and was a client of the person or company immediately before becoming resident in the local jurisdiction;

(b) the client is the spouse or a child of a client referred to in paragraph (a);

(c) except in Ontario, the client is a client of the person or company on September 27, 2009 pursuant to the person or company's reliance on an exemption from the registration requirement under Part 5 of Multilateral Instrument 11-101 Principal Regulator System on that date;

"exempt market dealer" means a person or company registered in the category of exempt market dealer;

"IIROC" means the Investment Industry Regulatory Organization of Canada;

"interim period" means a period commencing on the first day of the financial year and ending 9, 6 or 3 months before the end of the financial year;

"investment dealer" means a person or company registered in the category of investment dealer;

"managed account" means an account of a client for which a person or company makes the investment decisions if that person or company has discretion to trade in securities for the account without requiring the client's express consent to a transaction;

"marketplace" has the same meaning as in section 1.1 of National Instrument 21-101 Marketplace Operation;

"MFDA" means the Mutual Fund Dealers Association of Canada;

"mutual fund dealer" means a person or company registered in the category of mutual fund dealer;

"permitted client" means any of the following:

(a) a Canadian financial institution or a Schedule III bank;

(b) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);

(c) a subsidiary of any person or company referred to in paragraph (a) or (b), if the person or company owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of the subsidiary;

(d) a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser, investment dealer, mutual fund dealer or exempt market dealer;

(e) a pension fund that is regulated by either the federal Office of the Superintendent of Financial Institutions or a pension commission or similar regulatory authority of a jurisdiction of Canada or a wholly-owned subsidiary of such a pension fund;

(f) an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (e);

(g) the Government of Canada or a jurisdiction of Canada, or any Crown corporation, agency or wholly-owned entity of the Government of Canada or a jurisdiction of Canada;

(h) any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;

(i) a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec;

(j) a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a managed account managed by the trust company or trust corporation, as the case may be;

(k) a person or company acting on behalf of a managed account managed by the person or company, if the person or company is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction;

(l) an investment fund if one or both of the following apply:

(i) the fund is managed by a person or company registered as an investment fund manager under the securities legislation of a jurisdiction of Canada;

(ii) the fund is advised by a person or company authorized to act as an adviser under the securities legislation of a jurisdiction of Canada;

(m) in respect of a dealer, a registered charity under the Income Tax Act (Canada) that obtains advice on the securities to be traded from an eligibility adviser, as defined in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions, or an adviser registered under the securities legislation of the jurisdiction of the registered charity;

(n) in respect of an adviser, a registered charity under the Income Tax Act (Canada) that is advised by an eligibility adviser, as defined in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions, or an adviser registered under the securities legislation of the jurisdiction of the registered charity;

(o) an individual who beneficially owns financial assets, as defined in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions, having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5 million;

(p) a person or company that is entirely owned by an individual or individuals referred to in paragraph (o), who holds the beneficial ownership interest in the person or company directly or through a trust, the trustee of which is a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction;

(q) a person or company, other than an individual or an investment fund, that has net assets of at least $25 million as shown on its most recently prepared financial statements;

(r) a person or company that distributes securities of its own issue in Canada only to persons or companies referred to in paragraphs (a) to (q);

"portfolio manager" means a person or company registered in the category of portfolio manager;

"principal jurisdiction" means

(a) for a person or company other than an individual, the jurisdiction of Canada in which the person or company's head office is located, and

(b) for an individual, the jurisdiction of Canada in which the individual's working office is located;

"registered firm" means a registered dealer, a registered adviser, or a registered investment fund manager;

"registered individual" means an individual who is registered

(a) in a category that authorizes the individual to act as a dealer or an adviser on behalf of a registered firm,

(b) as ultimate designated person, or

(c) as chief compliance officer;

"related issuer" has the same meaning as in section 1.1 of National Instrument 33-105 Underwriting Conflicts;

"restricted dealer" means a person or company registered in the category of restricted dealer;

"restricted portfolio manager" means a person or company registered in the category of restricted portfolio manager;

"Schedule III bank" means an authorized foreign bank named in Schedule III of the Bank Act (Canada);

"scholarship plan dealer" means a person or company registered in the category of scholarship plan dealer;

"sponsoring firm" means the registered firm on whose behalf an individual acts as a dealer, an underwriter, an adviser, a chief compliance officer or an ultimate designated person;

"subsidiary" has the same meaning as in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions;

"working office" means the office of the sponsoring firm where an individual does most of his or her business.

1.2 Interpretation of "securities" in Alberta, British Columbia, New Brunswick and Saskatchewan

In Alberta, British Columbia, New Brunswick and Saskatchewan, a reference to "securities" in this Instrument includes "exchange contracts", unless the context otherwise requires.

1.3 Information may be given to the principal regulator

(1) In this section, "principal regulator" means

(a) for a person or company whose head office is in a jurisdiction of Canada, the securities regulatory authority or regulator of that jurisdiction, and

(b) for a person or company whose head office is not in Canada, the securities regulatory authority or regulator of,

(i) if the person or company has not completed its first financial year since being registered, the jurisdiction of Canada in which the person or company expects most of its clients to be resident at the end of its current financial year, and

(ii) in all other circumstances, the jurisdiction of Canada in which most of the person or company's clients were resident at the end of its most recently completed financial year.

(2) Except under the following sections, for the purpose of a requirement in this Instrument to notify the regulator or the securities regulatory authority the person or company may notify the regulator or the securities regulatory authority by notifying the person or company's principal regulator:

(a) section 8.18 [international dealer];

(b) section 8.26 [international adviser];

(c) section 11.9 [registrant acquiring a registered firm's securities or assets];

(d) section 11.10 [registered firm whose securities are acquired].

(3) For the purpose of a requirement in this Instrument to deliver or submit a document to the regulator or the securities regulatory authority the person or company may deliver or submit the document by delivering or submitting it to the person or company's principal regulator.

Part 2 Categories of registration for individuals

2.1 Individual categories

(1) The following are the categories of registration for an individual who is required, under securities legislation, to be registered to act on behalf of a registered firm:

(a) dealing representative;

(b) advising representative;

(c) associate advising representative;

(d) ultimate designated person;

(e) chief compliance officer.

(2) An individual registered in the category of

(a) dealing representative may act as a dealer or an underwriter in respect of a security that the individual's sponsoring firm is permitted to trade or underwrite,

(b) advising representative may act as an adviser in respect of a security that the individual's sponsoring firm is permitted to advise on,

(c) associate advising representative may act as an adviser in respect of a security that the individual's sponsoring firm is permitted to advise on if the advice has been approved under subsection 4.2(1) [associate advising representatives - pre-approval of advice],

(d) ultimate designated person must perform the functions set out in section 5.1 [responsibilities of the ultimate designated person], and

(e) chief compliance officer must perform the functions set out in section 5.2 [responsibilities of the chief compliance officer].

(3) Subsection (1) does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, the same categories of registration for individuals as in subsection 2.1(1) are set out under section 25 of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

2.2 Client mobility exemption -- individuals

(1) The registration requirement does not apply to an individual if all of the following apply:

(a) the individual is registered as a dealing, advising or associate advising representative in the individual's principal jurisdiction;

(b) the individual's sponsoring firm is registered in the firm's principal jurisdiction;

(c) the individual does not act as a dealer, underwriter or adviser in the local jurisdiction other than as he or she is permitted to in his or her principal jurisdiction according to the individual's registration in that jurisdiction;

(d) the individual does not act as a dealer, underwriter or adviser in the local jurisdiction other than for 5 or fewer eligible clients;

(e) the individual complies with Part 13 [dealing with clients - individuals and firms];

(f) the individual deals fairly, honestly and in good faith in the course of his or her dealings with an eligible client;

(g) before first acting as a dealer or adviser for an eligible client, the individual's sponsoring firm has disclosed to the client that the individual, and if the firm is relying on section 8.30 [client mobility exemption - firms], the firm,

(i) is exempt from registration in the local jurisdiction, and

(ii) is not subject to requirements otherwise applicable under local securities legislation.

(2) If an individual relies on the exemption in this section, the individual's sponsoring firm must submit a completed Form 31-103F3 Use of Mobility Exemption to the securities regulatory authority of the local jurisdiction as soon as possible after the individual first relies on this section.

2.3 Individuals acting for investment fund managers

The investment fund manager registration requirement does not apply to an individual acting on behalf of a registered investment fund manager.

Part 3 Registration requirements - individuals

Division 1 General proficiency requirements

3.1 Definitions

In this Part

"Branch Manager Proficiency Exam" means the examination prepared and administered by the RESP Dealers Association of Canada and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Canadian Investment Funds Course Exam" means the examination prepared and administered by the IFSE Institute and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Canadian Investment Manager designation" means the designation earned through the Canadian investment manager program prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every program that preceded that program, or succeeded that program, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned program;

"Canadian Securities Course Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Chief Compliance Officers Qualifying Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"CFA Charter" means the charter earned through the Chartered Financial Analyst program prepared and administered by the CFA Institute and so named on the day this Instrument comes into force, and every program that preceded that program, or succeeded that program, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned program;

"Exempt Market Products Exam" means the examination prepared and administered by the IFSE Institute and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Investment Funds in Canada Course Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Mutual Fund Dealers Compliance Exam" means the examination prepared and administered by the IFSE Institute and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"New Entrants Course Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"PDO Exam" means

(a) the Officers', Partners' and Directors' Exam prepared and administered by the IFSE Institute and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination, or

(b) the Partners, Directors and Senior Officers Course Exam prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Sales Representative Proficiency Exam" means the examination prepared and administered by the RESP Dealers Association of Canada and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Series 7 Exam" means the examination prepared and administered by the Financial Industry Regulatory Authority in the United States of America and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination.

3.2 U.S. equivalency

In this Part, an individual is not required to have passed the Canadian Securities Course Exam if the individual has passed the Series 7 Exam and the New Entrants Course Exam.

3.3 Time limits on examination requirements

(1) For the purpose of this Part, an individual is deemed to have not passed an examination unless the individual passed the examination not more than 36 months before the date of his or her application for registration.

(2) Subsection (1) does not apply if the individual passed the examination more than 36 months before the date of his or her application and has met one of the following conditions:

(a) the individual was registered in the same category in any jurisdiction of Canada at any time during the 36-month period before the date of his or her application;

(b) the individual has gained 12 months of relevant securities industry experience during the 36-month period before the date of his or her application.

(3) For the purpose of paragraph (2)(a), an individual is not considered to have been registered during any period in which the individual's registration was suspended.

Division 2 Education and experience requirements

3.4 Proficiency -- initial and ongoing

(1) An individual must not perform an activity that requires registration unless the individual has the education, training and experience that a reasonable person would consider necessary to perform the activity competently, including understanding the structure, features and risks of each security the individual recommends.

(2) A chief compliance officer must not perform an activity set out in section 5.2 [responsibilities of the chief compliance officer] unless the individual has the education, training and experience that a reasonable person would consider necessary to perform the activity competently.

3.5 Mutual fund dealer - dealing representative

A dealing representative of a mutual fund dealer must not act as a dealer in respect of the securities listed in section 7.1(2)(b) unless any of the following apply:

(a) the individual has passed the Canadian Investment Funds Course Exam, the Canadian Securities Course Exam or the Investment Funds in Canada Course Exam;

(b) the individual has met the requirements of section 3.11 [portfolio manager - advising representative];

(c) the individual has earned a CFA Charter and has gained 12 months of relevant securities industry experience in the 36-month period before applying for registration;

(d) the individual is exempt from section 3.11 [portfolio manager - advising representative] because of subsection 16.10(1) [proficiency for dealing and advising representatives].

3.6 Mutual fund dealer - chief compliance officer

A mutual fund dealer must not designate an individual as its chief compliance officer under subsection 11.3(1) [designating a chief compliance officer] unless any of the following apply:

(a) the individual has passed

(i) the Canadian Investment Funds Course Exam, the Canadian Securities Course Exam or the Investment Funds in Canada Course Exam, and

(ii) the PDO Exam, the Mutual Fund Dealers Compliance Exam or the Chief Compliance Officers Qualifying Exam;

(b) the individual has met the requirements of section 3.13 [portfolio manager - chief compliance officer];

(c) section 3.13 [portfolio manager - chief compliance officer] does not apply in respect of the individual because of subsection 16.9(2) [registration of chief compliance officers].

3.7 Scholarship plan dealer -- dealing representative

A dealing representative of a scholarship plan dealer must not act as a dealer in respect of the securities listed in section 7.1(2)(c) unless the individual has passed the Sales Representative Proficiency Exam.

3.8 Scholarship plan dealer - chief compliance officer

A scholarship plan dealer must not designate an individual as its chief compliance officer under subsection 11.3(1) [designating a chief compliance officer] unless the individual has passed all of the following:

(a) the Sales Representative Proficiency Exam;

(b) the Branch Manager Proficiency Exam;

(c) the PDO Exam or the Chief Compliance Officers Qualifying Exam.

3.9 Exempt market dealer -- dealing representative

A dealing representative of an exempt market dealer must not perform an activity listed in section 7.1(2)(d) unless any of the following apply:

(a) the individual has passed the Canadian Securities Course Exam;

(b) the individual has passed the Exempt Market Products Exam;

(c) the individual has earned a CFA Charter and has gained 12 months of relevant securities industry experience in the 36-month period before applying for registration;

(d) the individual satisfies the conditions set out in section 3.11 [portfolio manager - advising representative];

(e) the individual is exempt from section 3.11 [portfolio manager - advising representative] because of subsection 16.10(1) [proficiency for dealing and advising representatives].

3.10 Exempt market dealer -- chief compliance officer

An exempt market dealer must not designate an individual as its chief compliance officer under subsection 11.3(1) [designating a chief compliance officer] unless any of the following apply:

(a) the individual has passed the following:

(i) the Exempt Market Products Exam or the Canadian Securities Course Exam; and

(ii) the PDO Exam or the Chief Compliance Officers Qualifying Exam;

(b) the individual has met the requirements of section 3.13 [portfolio manager - chief compliance officer];

(c) section 3.13 [portfolio manager - chief compliance officer] does not apply in respect of the individual because of subsection 16.9(2) [registration of chief compliance officers].

3.11 Portfolio manager -- advising representative

An advising representative of a portfolio manager must not act as an adviser on behalf of the portfolio manager unless any of the following apply:

(a) the individual has earned a CFA Charter and has gained 12 months of relevant investment management experience in the 36-month period before applying for registration;

(b) the individual has received the Canadian Investment Manager designation and has gained 48 months of relevant investment management experience, 12 months of which was gained in the 36-month period before applying for registration.

3.12 Portfolio manager -- associate advising representative

An associate advising representative of a portfolio manager must not act as an adviser on behalf of the portfolio manager unless any of the following apply:

(a) the individual has completed Level 1 of the Chartered Financial Analyst program and has gained 24 months of relevant investment management experience;

(b) the individual has received the Canadian Investment Manager designation and has gained 24 months of relevant investment management experience.

3.13 Portfolio manager -- chief compliance officer

A portfolio manager must not designate an individual as its chief compliance officer under subsection 11.3(1) [designating a chief compliance officer] unless any of the following apply:

(a) the individual has

(i) earned a CFA Charter or a professional designation as a lawyer, Chartered Accountant, Certified General Accountant or Certified Management Accountant in a jurisdiction of Canada, a notary in Québec, or the equivalent in a foreign jurisdiction,

(ii) passed the PDO Exam or the Chief Compliance Officers Qualifying Exam and, unless the individual has earned the CFA Charter, the Canadian Securities Course Exam, and

(iii) either

A) gained 36 months of relevant securities experience while working at an investment dealer, a registered adviser or an investment fund manager, or

B) provided professional services in the securities industry for 36 months and also worked at a registered dealer, a registered adviser or an investment fund manager for 12 months;

(b) the individual has passed the Canadian Securities Course Exam and either the PDO Exam or the Chief Compliance Officers Qualifying Exam and any of the following apply:

(i) the individual has worked at an investment dealer or a registered adviser for 5 years, including for 36 months in a compliance capacity;

(ii) the individual has worked for 5 years at a Canadian financial institution in a compliance capacity relating to portfolio management and also worked at a registered dealer or a registered adviser for 12 months;

(c) the individual has passed either the PDO Exam or the Chief Compliance Officers Qualifying Exam and has met the requirements of section 3.11 [portfolio manager - advising representative].

3.14 Investment fund manager -- chief compliance officer

An investment fund manager must not designate an individual as its chief compliance officer under subsection 11.3(1) [designating a chief compliance officer] unless any of the following apply:

(a) the individual has

(i) earned a CFA Charter or a professional designation as a lawyer, Chartered Accountant, Certified General Accountant or Certified Management Accountant in a jurisdiction of Canada, a notary in Québec, or the equivalent in a foreign jurisdiction,

(ii) passed the PDO Exam or the Chief Compliance Officers Qualifying Exam and, unless the individual has earned the CFA Charter, the Canadian Securities Course Exam, and

(iii) either

A) gained 36 months of relevant securities experience while working at a registered dealer, a registered adviser or an investment fund manager, or

B) provided professional services in the securities industry for 36 months and also worked in a relevant capacity at an investment fund manager for 12 months;

(b) the individual has

(i) passed the Canadian Investment Funds Course Exam, the Canadian Securities Course Exam, or the Investment Funds in Canada Course Exam,

(ii) passed the PDO Exam or the Chief Compliance Officers Qualifying Exam, and

(iii) gained 5 years of relevant securities experience while working at a registered dealer, registered adviser or an investment fund manager, including 36 months in a compliance capacity;

(c) the individual has met the requirements of section 3.13 [portfolio manager - chief compliance officer];

(d) section 3.13 [portfolio manager - chief compliance officer] does not apply in respect of the individual because of subsection 16.9(2) [registration of chief compliance officers].

Division 3 Membership in a self-regulatory organization

3.15 Who must be approved by an SRO before registration

(1) A dealing representative of an investment dealer that is a member of IIROC must be an "approved person" as defined under the rules of IIROC.

(2) Except in Québec, a dealing representative of a mutual fund dealer that is a member of the MFDA must be an "approved person" as defined under the rules of the MFDA.

3.16 Exemptions from certain requirements for SRO-approved persons

(1) The following sections do not apply to a registered individual who is a dealing representative of a member of IIROC:

(a) subsection 13.2(3) [know your client];

(b) section 13.3 [suitability];

(c) section 13.13 [disclosure when recommending the use of borrowed money].

(2) The following sections do not apply to a registered individual who is a dealing representative of a member of the MFDA:

(a) section 13.3 [suitability];

(b) section 13.13 [disclosure when recommending the use of borrowed money].

(3) In Québec, the requirements listed in subsection (2) do not apply to a registered individual who is a dealing representative of a mutual fund dealer to the extent equivalent requirements to those listed in subsection (2) are applicable to the registered individual under the regulations in Québec.

Part 4 Restrictions on registered individuals

4.1 Restriction on acting for another registered firm

(1) A registered firm must not permit an individual to act as a dealing, advising or associate advising representative of the registered firm if the individual

(a) acts as an officer, partner or director of another registered firm that is not an affiliate of the first-mentioned registered firm, or

(b) is registered as a dealing, advising or associate advising representative of another registered firm.

(2) Paragraph (1)(b) does not apply in respect of a representative whose registration as a dealing, advising or associate advising representative of more than one registered firm was granted before July 11, 2011.

4.2 Associate advising representatives -- pre-approval of advice

(1) An associate advising representative of a registered adviser must not advise on securities unless, before giving the advice, the advice has been approved by an individual designated by the registered firm under subsection (2).

(2) A registered adviser must designate, for an associate advising representative, an advising representative to review the advice of the associate advising representative.

(3) No later than the 7th day following the date of a designation under subsection (2), a registered adviser must provide the regulator or, in Québec, the securities regulatory authority with the names of the advising representative and the associate advising representative who are the subject of the designation.

Part 5 Ultimate designated person and chief compliance officer

5.1 Responsibilities of the ultimate designated person

The ultimate designated person of a registered firm must do all of the following:

(a) supervise the activities of the firm that are directed towards ensuring compliance with securities legislation by the firm and each individual acting on the firm's behalf;

(b) promote compliance by the firm, and individuals acting on its behalf, with securities legislation.

5.2 Responsibilities of the chief compliance officer

The chief compliance officer of a registered firm must do all of the following:

(a) establish and maintain policies and procedures for assessing compliance by the firm, and individuals acting on its behalf, with securities legislation;

(b) monitor and assess compliance by the firm, and individuals acting on its behalf, with securities legislation;

(c) report to the ultimate designated person of the firm as soon as possible if the chief compliance officer becomes aware of any circumstances indicating that the firm, or any individual acting on its behalf, may be in non-compliance with securities legislation and any of the following apply:

(i) the non-compliance creates, in the opinion of a reasonable person, a risk of harm to a client;

(ii) the non-compliance creates, in the opinion of a reasonable person, a risk of harm to the capital markets;

(iii) the non-compliance is part of a pattern of non-compliance;

(d) submit an annual report to the firm's board of directors, or individuals acting in a similar capacity for the firm, for the purpose of assessing compliance by the firm, and individuals acting on its behalf, with securities legislation.

Part 6 Suspension and revocation of registration -- individuals

6.1 If individual ceases to have authority to act for firm

If a registered individual ceases to have authority to act as a registered individual on behalf of his or her sponsoring firm because of the end of, or a change in, the individual's employment, partnership, or agency relationship with the firm, the individual's registration with the firm is suspended until reinstated or revoked under securities legislation.

6.2 If IIROC approval is revoked or suspended

If IIROC revokes or suspends a registered individual's approval in respect of an investment dealer, the individual's registration as a dealing representative of the investment dealer is suspended until reinstated or revoked under securities legislation.

6.3 If MFDA approval is revoked or suspended

Except in Québec, if the MFDA revokes or suspends a registered individual's approval in respect of a mutual fund dealer, the individual's registration as a dealing representative of the mutual fund dealer is suspended until reinstated or revoked under securities legislation.

6.4 If sponsoring firm is suspended

If a registered firm's registration in a category is suspended, the registration of each registered dealing, advising or associate advising representative acting on behalf of the firm in that category is suspended until reinstated or revoked under securities legislation.

6.5 Dealing and advising activities suspended

If an individual's registration in a category is suspended, the individual must not act as a dealer, an underwriter or an adviser, as the case may be, under that category.

6.6 Revocation of a suspended registration - individual

If a registration of an individual has been suspended under this Part and it has not been reinstated, the registration is revoked on the 2nd anniversary of the suspension.

6.7 Exception for individuals involved in a hearing or proceeding

Despite section 6.6, if a hearing or proceeding concerning a suspended registrant is commenced under securities legislation or under the rules of an SRO, the registrant's registration remains suspended.

6.8 Application of Part 6 in Ontario

Other than section 6.5 [dealing and advising activities suspended], this Part does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, measures governing suspension in section 29 of the Securities Act (Ontario) are similar to those in Parts 6 and 10.

- - - - - - - - - - - - - - - - - - - -

Part 7 Categories of registration for firms

7.1 Dealer categories

(1) The following are the categories of registration for a person or company that is required, under securities legislation, to be registered as a dealer:

(a) investment dealer;

(b) mutual fund dealer;

(c) scholarship plan dealer;

(d) exempt market dealer;

(e) restricted dealer.

(2) A person or company registered in the category of

(a) investment dealer may act as a dealer or an underwriter in respect of any security,

(b) mutual fund dealer may act as a dealer in respect of any security of

(i) a mutual fund, or

(ii) an investment fund that is a labour-sponsored investment fund corporation or labour-sponsored venture capital corporation under legislation of a jurisdiction of Canada,

(c) scholarship plan dealer may act as a dealer in respect of a security of a scholarship plan, an educational plan or an educational trust,

(d) exempt market dealer may

(i) act as a dealer by trading a security that is distributed under an exemption from the prospectus requirement, whether or not a prospectus was filed in respect of the distribution,

(ii) act as a dealer by trading a security that, if the trade were a distribution, would be exempt from the prospectus requirement,

(iii) receive an order from a client to sell a security that was acquired by the client in a circumstance described in subparagraph (i) or (ii), and may act or solicit in furtherance of receiving such an order, and

(iv) act as an underwriter in respect of a distribution of securities that is made under an exemption from the prospectus requirement;

(e) restricted dealer may act as a dealer or an underwriter in accordance with the terms, conditions, restrictions or requirements applied to its registration.

(3) [repealed]

(4) Subsection (1) does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, the same categories of registration for firms acting as dealers as in subsection 7.1(1) are set out under subsection 26(2) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

7.2 Adviser categories

(1) The following are the categories of registration for a person or company that is required, under securities legislation, to be registered as an adviser:

(a) portfolio manager;

(b) restricted portfolio manager.

(2) A person or company registered in the category of

(a) portfolio manager may act as an adviser in respect of any security, and

(b) restricted portfolio manager may act as an adviser in respect of any security in accordance with the terms, conditions, restrictions or requirements applied to its registration.

(3) Subsection (1) does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, the same categories of registration for firms acting as advisers as in subsection 7.2(1) are set out under subsection 26(6) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

7.3 Investment fund manager category

The category of registration for a person or company that is required, under securities legislation, to be registered as an investment fund manager is "investment fund manager".

Part 8 Exemptions from the requirement to register

Division 1 Exemptions from dealer and underwriter registration

8.1 Interpretation of "trade" in Québec

In this Part, in Québec, "trade" refers to any of the following activities:

(a) the activities described in the definition of "dealer" in section 5 of the Securities Act (R.S.Q., c. V-1.1), including the following activities:

(i) the sale or disposition of a security by onerous title, whether the terms of payment are on margin, installment or otherwise, but does not include a transfer or the giving in guarantee of securities in connection with a debt or the purchase of a security, except as provided in paragraph (b);

(ii) participation as a trader in any transaction in a security through the facilities of an exchange or a quotation and trade reporting system;

(iii) the receipt by a registrant of an order to buy or sell a security;

(b) a transfer or the giving in guarantee of securities of an issuer from the holdings of a control person in connection with a debt.

8.2 Definition of "securities" in Alberta, British Columbia, New Brunswick and Saskatchewan

Despite section 1.2, in Alberta, British Columbia, New Brunswick and Saskatchewan, a reference to "securities" in this Division excludes "exchange contracts".

8.3 Interpretation -- exemption from underwriter registration requirement

In this Division, an exemption from the dealer registration requirement is an exemption from the underwriter registration requirement.

8.4 Person or company not in the business of trading in British Columbia, Manitoba and New Brunswick

(1) In British Columbia and New Brunswick, a person or company is exempt from the dealer registration requirement if the person or company

(a) is not engaged in the business of trading in securities or exchange contracts as a principal or agent, and

(b) does not hold himself, herself or itself out as engaging in the business of trading in securities or exchange contracts as a principal or agent.

(2) In Manitoba, a person or company is exempt from the dealer registration requirement if the person or company

(a) is not engaged in the business of trading in securities as a principal or agent, and

(b) does not hold himself, herself or itself out as engaging in the business of trading in securities as a principal or agent.

8.5 Trades through or to a registered dealer

The dealer registration requirement does not apply to a person or company in respect of a trade by the person or company if one of the following applies:

(a) the trade is made solely through an agent who is a registered dealer, if the dealer is registered in a category that permits the trade;

(b) the trade is made to a registered dealer who is purchasing as principal, if the dealer is registered in a category that permits the trade.

8.6 Investment fund trades by adviser to managed account

(1) The dealer registration requirement does not apply to a registered adviser, or an adviser that is exempt from registration under section 8.26 [international adviser], in respect of a trade in a security of an investment fund if both of the following apply:

(a) the adviser acts as the fund's adviser and investment fund manager;

(b) the trade is to a managed account of a client of the adviser.

(2) The exemption in subsection (1) is not available if the managed account or investment fund was created or is used primarily for the purpose of qualifying for the exemption.

(3) An adviser that relies on subsection (1) must provide written notice to the regulator or, in Québec, the securities regulatory authority that it is relying on the exemption within 10 days of its first use of the exemption.

8.7 Investment fund reinvestment

(1) Subject to subsections (2), (3), (4) and (5), the dealer registration requirement does not apply to an investment fund, or the investment fund manager of the fund, in respect of a trade in a security with a security holder of the investment fund if the trade is permitted by a plan of the investment fund and is in a security of the investment fund's own issue and if any of the following apply:

(a) a dividend or distribution out of earnings, surplus, capital or other sources payable in respect of the investment fund's securities is applied to the purchase of the security that is of the same class or series as the securities to which the dividends or distributions are attributable;

(b) the security holder makes an optional cash payment to purchase the security of the investment fund and both of the following apply:

(i) the security is of the same class or series of securities described in paragraph (a) that trade on a marketplace;

(ii) the aggregate number of securities issued under the optional cash payment does not exceed, in the financial year of the investment fund during which the trade takes place, 2 per cent of the issued and outstanding securities of the class to which the plan relates as at the beginning of the financial year.

(2) The exemption in subsection (1) is not available unless the plan that permits the trade is available to every security holder in Canada to which the dividend or distribution is available.

(3) The exemption in subsection (1) is not available if a sales charge is payable on a trade described in the subsection.

(4) At the time of the trade, if the investment fund is a reporting issuer and in continuous distribution, the investment fund must have set out in the prospectus under which the distribution is made

(a) details of any deferred or contingent sales charge or redemption fee that is payable at the time of the redemption of the security, and

(b) any right that the security holder has to elect to receive cash instead of securities on the payment of a dividend or making of a distribution by the investment fund and instructions on how the right can be exercised.

(5) At the time of the trade, if the investment fund is a reporting issuer and is not in continuous distribution, the investment fund must provide the information required by subsection (4) in its prospectus, annual information form or a material change report.

8.8 Additional investment in investment funds

The dealer registration requirement does not apply to an investment fund, or the investment fund manager of the fund, in respect of a trade in a security of the investment fund's own issue with a security holder of the investment fund if all of the following apply:

(a) the security holder initially acquired securities of the investment fund as principal for an acquisition cost of not less than $150,000 paid in cash at the time of the acquisition;

(b) the trade is in respect of a security of the same class or series as the securities initially acquired, as described in paragraph (a);

(c) the security holder, as at the date of the trade, holds securities of the investment fund and one or both of the following apply:

(i) the acquisition cost of the securities being held was not less than $150,000;

(ii) the net asset value of the securities being held is not less than $150,000.

8.9 Additional investment in investment funds if initial purchase before September 14, 2005

The dealer registration requirement does not apply in respect of a trade by an investment fund in a security of its own issue to a purchaser that initially acquired a security of the same class as principal before September 14, 2005 if all of the following apply:

(a) the security was initially acquired under any of the following provisions:

(i) in Alberta, sections 86(e) and 131(1)(d) of the Securities Act (Alberta) as they existed prior to their repeal by sections 9(a) and 13 of the Securities Amendment Act (Alberta), 2003 SA c.32 and sections 66.2 and 122.2 of the Alberta Securities Commission Rules (General);

(ii) in British Columbia, sections 45(2) (5) and (22), and 74(2) (4) and (19) of the Securities Act (British Columbia);

(iii) in Manitoba, sections 19(3) and 58(1)(a) of the Securities Act (Manitoba) and section 90 of the Securities Regulation MR 491/88R;

(iv) in New Brunswick, section 2.8 of Local Rule 45-501 Prospectus and Registration Exemptions;

(v) in Newfoundland and Labrador, sections 36(1)(e) and 73(1)(d) of theSecurities Act (Newfoundland and Labrador);

(vi) in Nova Scotia, sections 41(1)(e) and 77(1)(d) of the Securities Act (Nova Scotia);

(vii) in Northwest Territories, section 3(c) and (z) of Blanket Order No. 1;

(viii) in Nunavut, section 3(c) and (z) of Blanket Order No. 1;

(ix) in Ontario, sections 35(1)5 and 72(1)(d) of the Securities Act (Ontario) and section 2.12 of Ontario Securities Commission Rule 45-501Exempt Distributions that came into force on January 12, 2004;

(x) in Prince Edward Island, section 2(3)(d) of the former Securities Act (Prince Edward Island) and Prince Edward Island Local Rule 45-512 Exempt Distributions - Exemption for Purchase of Mutual Fund Securities;

(xi) in Québec, former sections 51 and 155.1(2) of the Securities Act (Québec);

(xii) in Saskatchewan, sections 39(1)(e) and 81(1)(d) of The Securities Act, 1988 (Saskatchewan);

(b) the trade is for a security of the same class or series as the initial trade;

(c) the security holder, as at the date of the trade, holds securities of the investment fund that have one or both of the following characteristics:

(i) an acquisition cost of not less than the minimum amount prescribed by securities legislation referred to in paragraph (a) under which the initial trade was conducted;

(ii) a net asset value of not less than the minimum amount prescribed by securities legislation referred to in paragraph (a) under which the initial trade was conducted.

8.10 Private investment club

The dealer registration requirement does not apply in respect of a trade in a security of an investment fund if all of the following apply:

(a) the fund has no more than 50 beneficial security holders;

(b) the fund does not seek and has never sought to borrow money from the public;

(c) the fund does not distribute and has never distributed its securities to the public;

(d) the fund does not pay or give any remuneration for investment management or administration advice in respect of trades in securities, except normal brokerage fees;

(e) the fund, for the purpose of financing its operations, requires security holders to make contributions in proportion to the value of the securities held by them.

8.11 Private investment fund - loan and trust pools

(1) The dealer registration requirement does not apply in respect of a trade in a security of an investment fund if all of the following apply:

(a) the fund is administered by a trust company or trust corporation that is registered or authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(b) the fund has no promoter or investment fund manager other than the trust company or trust corporation referred to in paragraph (a);

(c) the fund commingles the money of different estates and trusts for the purpose of facilitating investment.

(2) Despite subsection (1), a trust company or trust corporation registered under the laws of Prince Edward Island that is not registered under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada is not a trust company or trust corporation for the purpose of paragraph (1)(a).

8.12 Mortgages

(1) In this section, "syndicated mortgage" means a mortgage in which two or more persons or companies participate, directly or indirectly, as lenders in the debt obligation that is secured by the mortgage.

(2) Subject to subsection (3), the dealer registration requirement does not apply in respect of a trade in a mortgage on real property in a jurisdiction of Canada by a person or company who is registered or licensed, or exempted from registration or licensing, under mortgage brokerage or mortgage dealer legislation of that jurisdiction.

(3) In Alberta, British Columbia, Manitoba, Québec and Saskatchewan, subsection (2) does not apply in respect of a trade in a syndicated mortgage.

(4) This section does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario a similar exemption from the dealer registration requirement is provided under subsection 35(4) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

8.13 Personal property security legislation

(1) The dealer registration requirement does not apply in respect of a trade to a person or company, other than an individual in a security evidencing indebtedness secured by or under a security agreement, secured in accordance with personal property security legislation of a jurisdiction of Canada that provides for the granting of security in personal property.

(2) This section does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario a similar exemption from the dealer registration requirement is provided under subsection 35(2) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

8.14 Variable insurance contract

(1) In this section

"contract", "group insurance", "insurance company", "life insurance" and "policy" have the respective meanings assigned to them in the legislation referenced opposite the name of the local jurisdiction in Appendix A of National Instrument 45-106 Prospectus and Registration Exemptions;

"variable insurance contract" means a contract of life insurance under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets.

(2) The dealer registration requirement does not apply in respect of a trade in a variable insurance contract by an insurance company if the variable insurance contract is

(a) a contract of group insurance,

(b) a whole life insurance contract providing for the payment at maturity of an amount not less than 75% of the premium paid up to age 75 years for a benefit payable at maturity,

(c) an arrangement for the investment of policy dividends and policy proceeds in a separate and distinct fund to which contributions are made only from policy dividends and policy proceeds, or

(d) a variable life annuity.

8.15 Schedule III banks and cooperative associations - evidence of deposit

(1) The dealer registration requirement does not apply in respect of a trade in an evidence of deposit issued by a Schedule III bank or an association governed by the Cooperative Credit Associations Act (Canada).

(2) This section does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, subsection 8.15(1) is not required because the security described in the exemption is excluded from the definition of "security" in subsection 1(1) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

8.16 Plan administrator

(1) In this section

"consultant" has the same meaning as in section 2.22 of National Instrument 45-106 Prospectus and Registration Exemptions;

"executive officer" has the same meaning as in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions;

"permitted assign" has the same meaning as in section 2.22 of National Instrument 45-106 Prospectus and Registration Exemptions;

"plan" means a plan or program established or maintained by an issuer providing for the acquisition of securities of the issuer by employees, executive officers, directors or consultants of the issuer or of a related entity of the issuer;

"plan administrator" means a trustee, custodian, or administrator, acting on behalf of, or for the benefit of, employees, executive officers, directors or consultants of an issuer or of a related entity of an issuer;

"related entity" has the same meaning as in section 2.22 of National Instrument 45-106 Prospectus and Registration Exemptions.

(2) The dealer registration requirement does not apply in respect of a trade made pursuant to a plan of the issuer in a security of an issuer, or an option to acquire a security of the issuer, made by the issuer, a control person of the issuer, a related entity of the issuer, or a plan administrator of the issuer with any of the following:

(a) the issuer;

(b) a current or former employee, executive officer, director or consultant of the issuer or a related entity of the issuer;

(c) a permitted assign of a person or company referred to in paragraph (b).

(3) The dealer registration requirement does not apply in respect of a trade in a security of an issuer, or an option to acquire a security of the issuer, made by a plan administrator of the issuer if

(a) the trade is pursuant to a plan of the issuer, and

(b) the conditions in section 2.14 of National Instrument 45-102 Resale of Securities are satisfied.

8.17 Reinvestment plan

(1) Subject to subsections (3), (4) and (5), the dealer registration requirement does not apply in respect of the following trades by an issuer, or by a trustee, custodian or administrator acting for or on behalf of the issuer, to a security holder of the issuer if the trades are permitted by a plan of the issuer:

(a) a trade in a security of the issuer's own issue if a dividend or distribution out of earnings, surplus, capital or other sources payable in respect of the issuer's securities is applied to the purchase of the security;

(b) subject to subsection (2), a trade in a security of the issuer's own issue if the security holder makes an optional cash payment to purchase the security of the issuer that trades on a marketplace.

(2) The aggregate number of securities issued under the optional cash payment referred to in subsection (1)(b) must not exceed, in any financial year of the issuer during which the trade takes place, 2% of the issued and outstanding securities of the class to which the plan relates as at the beginning of the financial year.

(3) A plan that permits the trades described in subsection (1) must be available to every security holder in Canada to which the dividend or distribution out of earnings, surplus, capital or other sources is available.

(4) This section is not available in respect of a trade in a security of an investment fund.

(5) Subject to section 8.4 [transition -- reinvestment plan] of National Instrument 45-106 Prospectus and Registration Exemptions, if the security traded under a plan described in subsection (1) is of a different class or series than the class or series of the security to which the dividend or distribution is attributable, the issuer or the trustee, custodian or administrator must have provided to each participant that is eligible to receive a security under the plan either a description of the material attributes and characteristics of the security traded under the plan or notice of a source from which the participant can obtain the information without charge.

8.18 International dealer

(1) In this section

"Canadian permitted client" means a permitted client referred to in any of paragraphs (a) to (e), (g) or (i) to (r) of the definition of "permitted client" in section 1.1 if

(a) in the case of an individual, the individual is a resident of Canada;

(b) in the case of a trust, the terms of the trust expressly provide that those terms are governed by the laws of a jurisdiction of Canada;

(c) in any other case, the permitted client is incorporated, organized or continued under the laws of Canada or a jurisdiction of Canada.

"foreign security" means

(a) a security issued by an issuer incorporated, formed or created under the laws of a foreign jurisdiction, or

(b) a security issued by a government of a foreign jurisdiction.

(2) Subject to subsections (3) and (4), the dealer registration requirement does not apply in respect of any of the following:

(a) an activity, other than a sale of a security, that is reasonably necessary to facilitate a distribution of securities that are offered primarily in a foreign jurisdiction;

(b) a trade in a debt security with a Canadian permitted client during the security's distribution, if the debt security is offered primarily in a foreign jurisdiction and a prospectus has not been filed with a Canadian securities regulatory authority for the distribution;

(c) a trade in a debt security that is a foreign security with a Canadian permitted client, other than during the security's distribution;

(d) a trade in a foreign security with a Canadian permitted client, unless the trade is made during the security's distribution under a prospectus that has been filed with a Canadian securities regulatory authority;

(e) a trade in a foreign security with an investment dealer;

(f) a trade in any security with an investment dealer that is acting as principal.

(3) The exemption under subsection (2) is not available to a person or company unless all of the following apply:

(a) the head office or principal place of business of the person or company is in a foreign jurisdiction;

(b) the person or company is registered under the securities legislation of the foreign jurisdiction in which its head office or principal place of business is located in a category of registration that permits it to carry on the activities in that jurisdiction that registration as a dealer would permit it to carry on in the local jurisdiction;

(c) the person or company engages in the business of a dealer in the foreign jurisdiction in which its head office or principal place of business is located;

(d) the person or company is acting as principal or as agent for

(i) the issuer of the securities,

(ii) a permitted client, or

(iii) a person or company that is not a resident of Canada;

(e) the person or company has submitted to the securities regulatory authority a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service.

(4) The exemption under subsection (2) is not available to a person or company in respect of a trade with a Canadian permitted client unless one of the following applies:

(a) the Canadian permitted client is a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer;

(b) the person or company has notified the Canadian permitted client of all of the following:

(i) the person or company is not registered in the local jurisdiction to make the trade;

(ii) the foreign jurisdiction in which the head office or principal place of business of the person or company is located;

(iii) all or substantially all of the assets of the person or company may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the person or company because of the above;

(v) the name and address of the agent for service of process of the person or company in the local jurisdiction.

(5) A person or company that relied on the exemption in subsection (2) during the 12 month period preceding December 1 of a year must notify the regulator or, in Québec, the securities regulatory authority of that fact by December 1 of that year.

(6) In Ontario, subsection (5) does not apply to a person or company that complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees.

(7) The adviser registration requirement does not apply to a person or company that is exempt from the dealer registration requirement under this section if the person or company provides advice to a client and the advice is

(a) in connection with an activity or trade described under subsection (2), and

(b) not in respect of a managed account of the client.

8.19 Self-directed registered education savings plan

(1) In this section

"self-directed RESP" means an educational savings plan registered under the Income Tax Act (Canada)

(a) that is structured so that contributions by a subscriber to the plan are deposited directly into an account in the name of the subscriber, and

(b) under which the subscriber maintains control and direction over the plan that enables the subscriber to direct how the assets of the plan are to be held, invested or reinvested subject to compliance with the Income Tax Act (Canada).

(2) The dealer registration requirement does not apply in respect of a trade in a self-directed RESP to a subscriber if both of the following apply:

(a) the trade is made by any of the following:

(i) a dealing representative of a mutual fund dealer who is acting on behalf of the mutual fund dealer in respect of securities listed in section 7.1(2)(b);

(ii) a Canadian financial institution;

(iii) in Ontario, a financial intermediary;

(b) the self-directed RESP restricts its investments in securities to securities in which the person or company who trades the self-directed RESP is permitted to trade.

8.20 Exchange contract -- Alberta, British Columbia, New Brunswick and Saskatchewan

(1) In Alberta, British Columbia and New Brunswick, the dealer registration requirement does not apply in respect of the following trades in exchange contracts:

(a) a trade by a person or company made

(i) solely through an agent who is a registered dealer, if the dealer is registered in a category that permits the trade, or

(ii) to a registered dealer who is purchasing as principal, if the dealer is registered in a category that permits the trade;

(b) subject to subsection (2), a trade resulting from an unsolicited order placed with an individual who is not a resident of, and does not carry on business in, the local jurisdiction.

(2) An individual referred to in subsection (1)(b) must not do any of the following:

(a) advertise or engage in promotional activity that is directed to persons or companies in the local jurisdiction during the 6 months preceding the trade;

(b) pay any commission or finder's fee to any person or company in the local jurisdiction in connection with the trade.

(3) In Saskatchewan, the dealer registration requirement does not apply in respect of either of the following:

(a) a trade in an exchange contract made solely through an agent who is a registered dealer, if the dealer is registered in a category that permits the trade;

(b) a trade in an exchange contract made to a registered dealer who is purchasing as principal, if the dealer is registered in a category that permits the trade.

8.21 Specified debt

(1) In this section

"approved credit rating" has the same meaning as in National Instrument 81-102 Mutual Funds;

"approved credit rating organization" has the same meaning as in National Instrument 81-102 Mutual Funds;

"permitted supranational agency" means any of the following:

(a) the African Development Bank, established by the Agreement Establishing the African Development Bank which came into force on September 10, 1964, that Canada became a member of on December 30, 1982;

(b) the Asian Development Bank, established under a resolution adopted by the United Nations Economic and Social Commission for Asia and the Pacific in 1965;

(c) the Caribbean Development Bank, established by the Agreement Establishing the Caribbean Development Bank which came into force on January 26, 1970, as amended, that Canada is a founding member of;

(d) the European Bank for Reconstruction and Development, established by the Agreement Establishing the European Bank for Reconstruction and Development and approved by the European Bank for Reconstruction and Development Agreement Act (Canada), that Canada is a founding member of;

(e) the Inter-American Development Bank, established by the Agreement establishing the Inter-American Development Bank which became effective December 30, 1959, as amended from time to time, that Canada is a member of;

(f) the International Bank for Reconstruction and Development, established by the Agreement for an International Bank for Reconstruction and Development approved by the Bretton Woods and Related Agreements Act (Canada);

(g) the International Finance Corporation, established by Articles of Agreement approved by the Bretton Woods and Related Agreements Act (Canada).

(2) The dealer registration requirement does not apply in respect of a trade in any of the following:

(a) a debt security issued by or guaranteed by the Government of Canada or the government of a jurisdiction of Canada;

(b) a debt security issued by or guaranteed by a government of a foreign jurisdiction if the debt security has an approved credit rating from an approved credit rating organization;

(c) a debt security issued by or guaranteed by a municipal corporation in Canada;

(d) a debt security secured by or payable out of rates or taxes levied under the law of a jurisdiction of Canada on property in the jurisdiction and collectible by or through the municipality in which the property is situated;

(e) a debt security issued by or guaranteed by a Canadian financial institution or a Schedule III bank, other than debt securities that are subordinate in right of payment to deposits held by the issuer or guarantor of those debt securities;

(f) a debt security issued by the Comité de gestion de la taxe scolaire de l'île de Montréal;

(g) a debt security issued by or guaranteed by a permitted supranational agency if the debt securities are payable in the currency of Canada or the United States of America.

(3) Paragraphs (2)(a), (c) and (d) do not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, exemptions from the dealer registration requirement similar to those in paragraphs 8.21(a), (c) and (d) are provided under paragraph 2 of subsection 35(1) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

8.22 Small security holder selling and purchase arrangements

(1) In this section

"exchange" means

(a) TSX Inc.,

(b) TSX Venture Exchange Inc., or

(c) an exchange that

(i) has a policy that is substantially similar to the policy of the TSX Inc., and

(ii) is designated by the securities regulatory authority for the purpose of this section;

"policy" means,

(a) in the case of TSX Inc., sections 638 and 639 [Odd lot selling and purchase arrangements] of the TSX Company Manual, as amended from time to time,

(b) in the case of the TSX Venture Exchange Inc., Policy 5.7 Small Shareholder Selling and Purchase Arrangements, as amended from time to time, or

(c) in the case of an exchange referred to in paragraph (c) of the definition of "exchange", the rule, policy or other similar instrument of the exchange on small shareholder selling and purchase arrangements.

(2) The dealer registration requirement does not apply in respect of a trade by an issuer or its agent, in securities of the issuer that are listed on an exchange, if all of the following apply:

(a) the trade is an act in furtherance of participation by the holders of the securities in an arrangement that is in accordance with the policy of that exchange;

(b) the issuer and its agent do not provide advice to a security holder about the security holder's participation in the arrangement referred to in paragraph (a), other than a description of the arrangement's operation, procedures for participation in the arrangement, or both;

(c) the trade is made in accordance with the policy of that exchange, without resort to an exemption from, or variation of, the significant subject matter of the policy;

(d) at the time of the trade after giving effect to a purchase under the arrangement, the market value of the maximum number of securities that a security holder is permitted to hold in order to be eligible to participate in the arrangement is not more than $25,000.

(3) For the purposes of subsection (2)(c), an exemption from, or variation of, the maximum number of securities that a security holder is permitted to hold under a policy in order to be eligible to participate in the arrangement provided for in the policy is not an exemption from, or variation of, the significant subject matter of the policy.

Division 2 Exemptions from adviser registration

8.23 Dealer without discretionary authority

The adviser registration requirement does not apply to a registered dealer, or a dealing representative acting on behalf of the dealer, that provides advice to a client if the advice is

(a) in connection with a trade in a security that the dealer and the representative are permitted to make under his, her or its registration,

(b) provided by the representative, and

(c) not in respect of a managed account of the client.

8.24 IIROC members with discretionary authority

The adviser registration requirement does not apply to a registered dealer, or a dealing representative acting on behalf of the dealer, that acts as an adviser in respect of a client's managed account if the registered dealer is a member of IIROC and the advising activities are conducted in accordance with the rules of IIROC.

8.25 Advising generally

(1) For the purposes of subsections (3) and (4), "financial or other interest" includes the following:

(a) ownership, beneficial or otherwise, in the security or in another security issued by the same issuer;

(b) an option in respect of the security or another security issued by the same issuer;

(c) a commission or other compensation received, or expected to be received, from any person or company in connection with the trade in the security;

(d) a financial arrangement regarding the security with any person or company;

(e) a financial arrangement with any underwriter or other person or company who has any interest in the security.

(2) The adviser registration requirement does not apply to a person or company that acts as an adviser if the advice the person or company provides does not purport to be tailored to the needs of the person or company receiving the advice.

(3) If a person or company that is exempt under subsection (2) recommends buying, selling or holding a specified security, a class of securities or the securities of a class of issuers in which any of the following has a financial or other interest, the person or company must disclose the interest concurrently with providing the advice:

(a) the person or company;

(b) any partner, director or officer of the person or company;

(c) any other person or company that would be an insider of the first-mentioned person or company if the first-mentioned person or company were a reporting issuer.

(4) If the financial or other interest of the person or company includes an interest in an option described in paragraph (b) of the definition of "financial or other interest" in subsection (1), the disclosure required by subsection (3) must include a description of the terms of the option.

(5) This section does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, measures similar to those in section 8.25 are in section 34 of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

8.26 International adviser

(1) Despite section 1.2, in Alberta, British Columbia, New Brunswick and Saskatchewan, a reference to "securities" in this section excludes "exchange contracts".

(2) In this section

"aggregate consolidated gross revenue" does not include the gross revenue of an affiliate of the adviser if the affiliate is registered in a jurisdiction of Canada;

"Canadian permitted client" means a permitted client referred to in any of paragraphs (a) to (c), (e), (g) or (i) to (r) of the definition of "permitted client" in section 1.1 if

(a) in the case of an individual, the individual is a resident of Canada;

(b) in the case of a trust, the terms of the trust expressly provide that those terms are governed by the laws of a jurisdiction of Canada; and

(c) in any other case, the permitted client is incorporated, organized or continued under the laws of Canada or a jurisdiction of Canada.

"foreign security" means

(a) a security issued by an issuer incorporated, formed or created under the laws of a foreign jurisdiction, and

(b) a security issued by a government of a foreign jurisdiction;

(3) The adviser registration requirement does not apply to a person or company in respect of its acting as an adviser to a Canadian permitted client if the adviser does not advise that client on securities of Canadian issuers, unless providing that advice is incidental to its providing advice on a foreign security.

(4) The exemption under subsection (3) is not available unless all of the following apply:

(a) the adviser's head office or principal place of business is in a foreign jurisdiction;

(b) the adviser is registered, or operates under an exemption from registration, under the securities legislation of the foreign jurisdiction in which its head office or principal place of business is located, in a category of registration that permits it to carry on the activities in that jurisdiction that registration as an adviser would permit it to carry on in the local jurisdiction;

(c) the adviser engages in the business of an adviser in the foreign jurisdiction in which its head office or principal place of business is located;

(d) as at the end of its most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the adviser, its affiliates and its affiliated partnerships was derived from the portfolio management activities of the adviser, its affiliates and its affiliated partnerships in Canada;

(e) before advising a client, the adviser notifies the client of all of the following:

(i) the adviser is not registered in the local jurisdiction to provide the advice described under subsection (3);

(ii) the foreign jurisdiction in which the adviser's head office or principal place of business is located;

(iii) all or substantially all of the adviser's assets may be situated outside of Canada;

(iv) there may be difficulty enforcing legal rights against the adviser because of the above;

(v) the name and address of the adviser's agent for service of process in the local jurisdiction;

(f) the adviser has submitted to the securities regulatory authority a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service.

(5) A person or company that relied on the exemption in subsection (3) during the 12 month period preceding December 1 of a year must notify the regulator, or, in Québec, the securities regulatory authority of that fact by December 1 of that year.

(6) In Ontario, subsection (5) does not apply to a person or company that complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees.

Division 3 Exemptions from investment fund manager registration

8.27 Private investment club

The investment fund manager registration requirement does not apply to a person or company in respect of its acting as an investment fund manager for an investment fund if all of the following apply:

(a) the fund has no more than 50 beneficial security holders;

(b) the fund does not seek and has never sought to borrow money from the public;

(c) the fund does not distribute and has never distributed its securities to the public;

(d) the fund does not pay or give any remuneration for investment management or administration advice in respect of trades in securities, except normal brokerage fees;

(e) the fund, for the purpose of financing its operations, requires security holders to make contributions in proportion to the value of the securities held by them.

8.28 Capital accumulation plan exemption

(1) In this section, "capital accumulation plan" means a tax assisted investment or savings plan, including a defined contribution registered pension plan, a group registered retirement savings plan, a group registered education savings plan, or a deferred profit-sharing plan, established by a plan sponsor that permits a member to make investment decisions among two or more investment options offered within the plan, and in Quebec and Manitoba, includes a simplified pension plan.

(2) The investment fund manager registration requirement does not apply to a person or company that acts as an investment fund manager for an investment fund if the person or company is only required to be registered as an investment fund manager because the investment fund is an investment option in a capital accumulation plan.

8.29 Private investment fund - loan and trust pools

(1) The investment fund manager registration requirement does not apply to a trust company or trust corporation that administers an investment fund if all of the following apply:

(a) the trust company or trust corporation is registered or authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(b) the fund has no promoter or investment fund manager other than the trust company or trust corporation;

(c) the fund commingles the money of different estates and trusts for the purpose of facilitating investment.

(2) The exemption in subsection (1) is not available to a trust company or trust corporation registered under the laws of Prince Edward Island unless it is also registered under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada.

(3) This section does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, subsection 35.1 of the Securities Act (Ontario) provides a general exemption from the registration requirement for trust companies, trust corporations and other specified financial institutions.

- - - - - - - - - - - - - - - - - - - -

Division 4 Mobility exemption -- firms

8.30 Client mobility exemption -- firms

The dealer registration requirement and the adviser registration requirement do not apply to a person or company if all of the following apply:

(a) the person or company is registered as a dealer or adviser in its principal jurisdiction;

(b) the person or company does not act as a dealer, underwriter or adviser in the local jurisdiction other than as it is permitted to in its principal jurisdiction according to its registration;

(c) the person or company does not act as a dealer, underwriter or adviser in the local jurisdiction other than in respect of 10 or fewer eligible clients;

(d) the person or company complies with Parts 13 [dealing with clients - individuals and firms] and 14 [handling client accounts - firms];

(e) the person or company deals fairly, honestly and in good faith in the course of its dealings with an eligible client.

Part 9 Membership in a self-regulatory organization

9.1 IIROC membership for investment dealers

An investment dealer must not act as a dealer unless the investment dealer is a "Dealer Member", as defined under the rules of IIROC.

9.2 MFDA membership for mutual fund dealers

Except in Québec, a mutual fund dealer must not act as a dealer unless the mutual fund dealer is a "member", as defined under the rules of the MFDA.

9.3 Exemptions from certain requirements for IIROC members

(1) Unless it is also registered as an investment fund manager, a registered firm that is a member of IIROC is exempt from the following requirements:

(a) section 12.1 [capital requirements];

(b) section 12.2 [notifying the regulator of a subordination agreement];

(c) section 12.3 [insurance - dealer];

(d) section 12.6 [global bonding or insurance];

(e) section 12.7 [notifying the regulator of a change, claim or cancellation];

(f) section 12.10 [annual financial statements];

(g) section 12.11 [interim financial information];

(h) section 12.12 [delivering financial information - dealer];

(i) subsection 13.2(3) [know your client];

(j) section 13.3 [suitability];

(k) section 13.12 [restriction on lending to clients];

(l) section 13.13 [disclosure when recommending the use of borrowed money];

(l.1) section 13.15 [handling complaints];

(m) subsection 14.2(2) [relationship disclosure information];

(n) section 14.6 [holding client assets in trust];

(o) section 14.8 [securities subject to a safekeeping agreement];

(p) section 14.9 [securities not subject to a safekeeping agreement];

(q) section 14.12 [content and delivery of trade confirmation].

(2) If a registered firm is a member of IIROC and is registered as an investment fund manager, the firm is exempt from the following requirements:

(a) section 12.3 [insurance -- dealer];

(b) section 12.6 [global bonding or insurance];

(c) section 12.12 [delivering financial information - dealer];

(d) subsection 13.2(3) [know your client];

(e) section 13.3 [suitability];

(f) section 13.12 [restriction on lending to clients];

(g) section 13.13 [disclosure when recommending the use of borrowed money];

(h) section 13.15 [handling complaints];

(i) subsection 14.2(2) [relationship disclosure information];

(j) section 14.6 [holding client assets in trust];

(k) section 14.8 [securities subject to a safekeeping agreement];

(l) section 14.9 [securities not subject to a safekeeping agreement];

(m) section 14.12 [content and delivery of trade confirmation].

(3) [repealed]

(4) [repealed]

(5) [repealed]

(6) [repealed]

9.4 Exemptions from certain requirements for MFDA members

(1) Unless it is also registered as an exempt market dealer, a scholarship plan dealer or an investment fund manager, a registered firm that is a member of the MFDA is exempt from the following requirements:

(a) section 12.1 [capital requirements];

(b) section 12.2 [notifying the regulator of a subordination agreement];

(c) section 12.3 [insurance - dealer];

(d) section 12.6 [global bonding or insurance];

(e) section 12.7 [notifying the regulator of a change, claim or cancellation];

(f) section 12.10 [annual financial statements];

(g) section 12.11 [interim financial information];

(h) section 12.12 [delivering financial information - dealer];

(i) section 13.3 [suitability];

(j) section 13.12 [restriction on lending to clients];

(k) section 13.13 [disclosure when recommending the use of borrowed money];

(l) section 13.15 [handling complaints];

(m) subsection 14.2(2) [relationship disclosure information];

(n) section 14.6 [holding client assets in trust];

(o) section 14.8 [securities subject to a safekeeping agreement];

(p) section 14.9 [securities not subject to a safekeeping agreement];

(q) section 14.12 [content and delivery of trade confirmation].

(2) If a registered firm is a member of the MFDA and is registered as an exempt market dealer, scholarship plan dealer or investment fund manager, the firm is exempt from the following requirements:

(a) section 12.3 [insurance - dealer];

(b) section 12.6 [global bonding or insurance];

(c) section 13.3 [suitability];

(d) section 13.12 [restriction on lending to clients];

(e) section 13.13 [disclosure when recommending the use of borrowed money];

(f) section 13.15 [handling complaints];

(g) subsection 14.2(2) [relationship disclosure information];

(h) section 14.6 [holding client assets in trust];

(i) section 14.8 [securities subject to a safekeeping agreement];

(j) section 14.9 [securities not subject to a safekeeping agreement];

(k) section 14.12 [content and delivery of trade confirmation].

(3) Subsections (1) and (2) do not apply in Québec.

(4) In Québec, the requirements listed in subsection (1) do not apply to a mutual fund dealer to the extent equivalent requirements to those listed in subsection (1) are applicable to the mutual fund dealer under the regulations in Québec.

Part 10 Suspension and revocation of registration -- firms

Division 1 When a firm's registration is suspended

10.1 Failure to pay fees

(1) In this section, "annual fees" means

(a) in Alberta, the fees required under section 2.1 of the Schedule - Fees in Alta. Reg. 115/95 -- Securities Regulation,

(b) in British Columbia, the annual fees required under section 22 of the Securities Regulation, B.C. Reg. 196/97,

(c) in Manitoba, the fees required under paragraph 1.(2)(a) of the Manitoba Fee Regulation, M.R 491\88R,

(d) in New Brunswick, the fees required under section 2.2 (c) of Local Rule 11-501 Fees,

(e) in Newfoundland and Labrador, the fees required under section 143 of theSecurities Act,

(f) in Nova Scotia, the fees required under Part XIV of the Regulations,

(g) in Northwest Territories, the fees required under sections 1(c) and 1(e) of the Securities Fee regulations, R-066-2008;

(h) in Nunavut, the fees required under section 1(a) of the Schedule to R-003-2003 to the Securities Fee regulation, R.R.N.W.T. 1990, c.20,

(i) in Prince Edward Island, the fees required under section 175 of the Securities Act R.S.P.E.I., Cap. S-3.1,

(j) in Québec, the fees required under section 271.5 of the Québec Securities Regulation,

(k) in Saskatchewan, the annual registration fees required to be paid by a registrant under section 176 of The Securities Regulations (Saskatchewan), and

(l) in Yukon, the fees required under O.I.C. 2009\66, pursuant to section 168 of theSecurities Act.

(2) If a registered firm has not paid the annual fees by the 30th day after the date the annual fees were due, the registration of the firm is suspended until reinstated or revoked under securities legislation.

10.2 If IIROC membership is revoked or suspended

If IIROC revokes or suspends a registered firm's membership, the firm's registration in the category of investment dealer is suspended until reinstated or revoked under securities legislation.

10.3 If MFDA membership is revoked or suspended

Except in Québec, if the MFDA revokes or suspends a registered firm's membership, the firm's registration in the category of mutual fund dealer is suspended until reinstated or revoked under securities legislation.

10.4 Activities not permitted while a firm's registration is suspended

If a registered firm's registration in a category is suspended, the firm must not act as a dealer, an underwriter, an adviser, or an investment fund manager, as the case may be, under that category.

Division 2 Revoking a firm's registration

10.5 Revocation of a suspended registration - firm

If a registration has been suspended under this Part and it has not been reinstated, the registration is revoked on the 2nd anniversary of the suspension.

10.6 Exception for firms involved in a hearing or proceeding

Despite section 10.5, if a hearing or proceeding concerning a suspended registrant is commenced under securities legislation or under the rules of an SRO, the registrant's registration remains suspended.

10.7 Application of Part 10 in Ontario

Other than section 10.4 [activities not permitted while a firm's registration is suspended], this Part does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, measures governing suspension in section 29 of the Securities Act (Ontario) are similar to those in Parts 6 and 10.

- - - - - - - - - - - - - - - - - - - -

Part 11 Internal controls and systems

Division 1 Compliance

11.1 Compliance system

A registered firm must establish, maintain and apply policies and procedures that establish a system of controls and supervision sufficient to

(a) provide reasonable assurance that the firm and each individual acting on its behalf complies with securities legislation, and

(b) manage the risks associated with its business in accordance with prudent business practices.

11.2 Designating an ultimate designated person

(1) A registered firm must designate an individual who is registered under securities legislation in the category of ultimate designated person to perform the functions described in section 5.1 [responsibilities of the ultimate designated person].

(2) A registered firm must designate an individual under subsection (1) who is one of the following:

(a) the chief executive officer of the registered firm or, if the firm does not have a chief executive officer, an individual acting in a capacity similar to a chief executive officer;

(b) the sole proprietor of the registered firm;

(c) the officer in charge of a division of the registered firm, if the activity that requires the firm to register occurs only within the division and the firm has significant other business activities.

(3) If an individual who is registered as a registered firm's ultimate designated person ceases to meet any of the conditions listed in subsection (2), the registered firm must designate another individual to act as its ultimate designated person.

11.3 Designating a chief compliance officer

(1) A registered firm must designate an individual who is registered under securities legislation in the category of chief compliance officer to perform the functions described in section 5.2 [responsibilities of the chief compliance officer].

(2) A registered firm must not designate an individual to act as the firm's chief compliance officer unless the individual has satisfied the applicable conditions in Part 3 [registration requirements - individuals] and the individual is one of the following:

(a) an officer or partner of the registered firm;

(b) the sole proprietor of the registered firm.

(3) If an individual who is registered as a registered firm's chief compliance officer ceases to meet any of the conditions listed in subsection (2), the registered firm must designate another individual to act as its chief compliance officer.

11.4 Providing access to the board of directors

A registered firm must permit its ultimate designated person and its chief compliance officer to directly access the firm's board of directors, or individuals acting in a similar capacity for the firm, at such times as the ultimate designated person or the chief compliance officer may consider necessary or advisable in view of his or her responsibilities.

Division 2 Books and records

11.5 General requirements for records

(1) A registered firm must maintain records to

(a) accurately record its business activities, financial affairs, and client transactions, and

(b) demonstrate the extent of the firm's compliance with applicable requirements of securities legislation.

(2) The records required under subsection (1) include, but are not limited to, records that do the following:

(a) permit timely creation and audit of financial statements and other financial information required to be filed or delivered to the securities regulatory authority;

(b) permit determination of the registered firm's capital position;

(c) demonstrate compliance with the registered firm's capital and insurance requirements;

(d) demonstrate compliance with internal control procedures;

(e) demonstrate compliance with the firm's policies and procedures;

(f) permit the identification and segregation of client cash, securities, and other property;

(g) identify all transactions conducted on behalf of the registered firm and each of its clients, including the parties to the transaction and the terms of the purchase or sale;

(h) provide an audit trail for

(i) client instructions and orders, and

(ii) each trade transmitted or executed for a client or by the registered firm on its own behalf;

(i) permit the generation of account activity reports for clients;

(j) provide securities pricing as may be required by securities legislation;

(k) document the opening of client accounts, including any agreements with clients;

(l) demonstrate compliance with sections 13.2 [know your client] and 13.3 [suitability];

(m) demonstrate compliance with complaint-handling requirements;

(n) document correspondence with clients;

(o) document compliance and supervision actions taken by the firm.

11.6 Form, accessibility and retention of records

(1) A registered firm must keep a record that it is required to keep under securities legislation

(a) for 7 years from the date the record is created,

(b) in a safe location and in a durable form, and

(c) in a manner that permits it to be provided to the regulator or, in Québec, the securities regulatory authority in a reasonable period of time.

(2) A record required to be provided to the regulator or, in Québec, the securities regulatory authority must be provided in a format that is capable of being read by the regulator or the securities regulatory authority.

(3) Paragraph (1)(c) does not apply in Ontario.

- - - - - - - - - - - - - - - - - - - -

Note: In Ontario, how quickly a registered firm is required to provide information to the regulator is addressed in subsection 19(3) of the Securities Act (Ontario).

- - - - - - - - - - - - - - - - - - - -

Division 3 Certain business transactions

11.7 Tied settling of securities transactions

A registered firm must not require a person or company to settle that person's or company's transaction with the registered firm through that person's or company's account at a Canadian financial institution as a condition, or on terms that would appear to a reasonable person to be a condition, of supplying a product or service, unless this method of settlement would be, to a reasonable person, necessary to provide the specific product or service that the person or company has requested.

11.8 Tied selling

A dealer, adviser or investment fund manager must not require another person or company

(a) to buy, sell or hold a security as a condition, or on terms that would appear to a reasonable person to be a condition, of supplying or continuing to supply a product or service, or

(b) to buy, sell or use a product or service as a condition, or on terms that would appear to a reasonable person to be a condition, of buying or selling a security.

11.9 Registrant acquiring a registered firm's securities or assets

(1) A registrant must give the regulator or, in Québec, the securities regulatory authority written notice in accordance with subsection (2) if it proposes to acquire any of the following:

(a) beneficial ownership of, or direct or indirect control or direction over, a security of a registered firm;

(b) beneficial ownership of, or direct or indirect control or direction over, a security of a person or company of which a registered firm is a subsidiary;

(c) all or a substantial part of the assets of a registered firm.

(2) The notice required under subsection (1) must be delivered to the regulator or, in Québec, the securities regulatory authority at least 30 days before the proposed acquisition and must include all relevant facts regarding the acquisition sufficient to enable the regulator or the securities regulatory authority to determine if the acquisition is

(a) likely to give rise to a conflict of interest,

(b) likely to hinder the registered firm in complying with securities legislation,

(c) inconsistent with an adequate level of investor protection, or

(d) otherwise prejudicial to the public interest.

(3) Subsection (1) does not apply to the following:

(a) a proposed acquisition if the beneficial ownership of, or direct or indirect control or direction over, the person or company whose security is to be acquired will not change;

(b) a registrant who, alone or in combination with any other person or company, proposes to acquire securities that, together with the securities already beneficially owned, or over which direct or indirect control or direction is already exercised, do not exceed more than 10% of any class or series of securities.

(4) Except in Ontario and British Columbia, if, within 30 days of the regulator's, or, in Québec, the securities regulatory authority's receipt of a notice under subsection (1), the regulator or the securities regulatory authority notifies the registrant making the acquisition that the regulator or the securities regulatory authority objects to the acquisition, the acquisition must not occur until the regulator or the securities regulatory authority approves it.

(5) In Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1)(a) or (c), the regulator notifies the registrant making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(6) Following receipt of a notice of objection under subsection (4) or (5), the person or company who submitted the notice to the regulator or, in Québec, the securities regulatory authority may request an opportunity to be heard on the matter.

11.10 Registered firm whose securities are acquired

(1) A registered firm must give the regulator or, in Québec, the securities regulatory authority written notice in accordance with subsection (2) if it knows or has reason to believe that any person or company, alone or in combination with any other person or company, is about to acquire, or has acquired, beneficial ownership of, or direct or indirect control or direction over, 10% or more of any class or series of voting securities of any of the following:

(a) the registered firm;

(b) a person or company of which the registered firm is a subsidiary.

(2) The notice required under subsection (1) must,

(a) be delivered to the regulator or, in Québec, the securities regulatory authority as soon as possible,

(b) include the name of each person or company involved in the acquisition, and

(c) after the registered firm has applied reasonable efforts to gather all relevant facts, include facts regarding the acquisition sufficient to enable the regulator or the securities regulatory authority to determine if the acquisition is

(i) likely to give rise to a conflict of interest,

(ii) likely to hinder the registered firm in complying with securities legislation,

(iii) inconsistent with an adequate level of investor protection, or

(iv) otherwise prejudicial to the public interest.

(3) This section does not apply to an acquisition in which the beneficial ownership of, or direct or indirect control or direction over, a registered firm does not change.

(4) This section does not apply if notice of the acquisition was provided under section 11.9 [registrant acquiring a registered firm's securities or assets].

(5) Except in British Columbia and Ontario, if, within 30 days of the regulator's or, in Québec, the securities regulatory authority's receipt of a notice under subsection (1), the regulator or the securities regulatory authority notifies the person or company making the acquisition that the regulator or the securities regulatory authority objects to the acquisition, the acquisition must not occur until the regulator or the securities regulatory authority approves it.

(6) In Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1)(a), the regulator notifies the person or company making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(7) Following receipt of a notice of objection under subsection (5) or (6), the person or company proposing to make the acquisition may request an opportunity to be heard on the matter.

Part 12 Financial condition

Division 1 Working capital

12.1 Capital requirements

(1) If, at any time, the excess working capital of a registered firm, as calculated in accordance with Form 31-103F1 Calculation of Excess Working Capital, is less than zero, the registered firm must notify the regulator or, in Québec, the securities regulatory authority as soon as possible.

(2) The excess working capital of a registered firm, as calculated in accordance with Form 31-103F1 Calculation of Excess Working Capital, must not be less than zero for 2 consecutive days.

(3) For the purpose of completing Form 31-103F1 Calculation of Excess Working Capital, the minimum capital is

(a) $25,000, for a registered adviser that is not also a registered dealer or a registered investment fund manager,

(b) $50,000, for a registered dealer that is not also a registered investment fund manager, and

(c) $100,000, for a registered investment fund manager.

(4) Paragraph (3)(c) does not apply to a registered investment fund manager that is exempt from the dealer registration requirement under section 8.6 [investment fund trades by adviser to managed account] in respect of all investment funds for which it acts as adviser.

(5) This section does not apply to a registered firm that is a member of IIROC and is registered as an investment fund manager if all of the following apply:

(a) the firm has a minimum capital of not less than $100,000 as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report;

(b) the firm notifies the regulator or, in Québec, the securities regulatory authority as soon as possible if, at any time, the firm's risk adjusted capital, as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report is less than zero;

(c) the risk adjusted capital of the firm, as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report, is not less than zero for 2 consecutive days.

(6) This section does not apply to a mutual fund dealer that is a member of the MFDA if it is also registered as an exempt market dealer, a scholarship plan dealer or an investment fund manager and if all of the following apply:

(a) the firm has a minimum capital, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report, of not less than

(i) $50,000, if the firm is registered as an exempt market dealer or scholarship plan dealer,

(ii) $100,000, if the firm is registered as an investment fund manager;

(b) the firm notifies the regulator or, in Québec, the securities regulatory authority as soon as possible if, at any time, the firm's risk adjusted capital, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report is less than zero;

(c) the risk adjusted capital of the firm, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report, is not less than zero for 2 consecutive days.

12.2 Notifying the regulator or the securities regulatory authority of a subordination agreement

If a registered firm has executed a subordination agreement, the effect of which is to exclude an amount from its long-term related party debt as calculated on Form 31-103F1 Calculation of Excess Working Capital, the firm must notify the regulator or, in Québec, the securities regulatory authority 10 days before it

(a) repays the loan or any part of the loan, or

(b) terminates the agreement.

Division 2 Insurance

12.3 Insurance -- dealer

(1) A registered dealer must maintain bonding or insurance

(a) that contains the clauses set out in Appendix A [bonding and insurance clauses], and

(b) that provides for a double aggregate limit or a full reinstatement of coverage.

(2) A registered dealer must maintain bonding or insurance in respect of each clause set out in Appendix A in the highest of the following amounts for each clause:

(a) $50,000 per employee, agent and dealing representative or $200,000, whichever is less;

(b) one per cent of the total client assets that the dealer holds or has access to, as calculated using the dealer's most recent financial records, or $25,000,000, whichever is less;

(c) one per cent of the dealer's total assets, as calculated using the dealer's most recent financial records, or $25,000,000, whichever is less;

(d) the amount determined to be appropriate by a resolution of the dealer's board of directors, or individuals acting in a similar capacity for the firm.

(3) In Québec, this section does not apply to a scholarship plan dealer or a mutual fund dealer registered only in Québec.

12.4 Insurance -- adviser

(1) A registered adviser must maintain bonding or insurance

(a) that contains the clauses set out in Appendix A [bonding and insurance clauses], and

(b) that provides for a double aggregate limit or a full reinstatement of coverage.

(2) A registered adviser that does not hold or have access to client assets must maintain bonding or insurance in respect of each clause set out in Appendix A in the amount of $50,000 for each clause.

(3) A registered adviser that holds or has access to client assets must maintain bonding or insurance in respect of each clause set out in Appendix A in the highest of the following amounts for each clause:

(a) one per cent of assets under management that the adviser holds or has access to, as calculated using the adviser's most recent financial records, or $25,000,000, whichever is less;

(b) one per cent of the adviser's total assets, as calculated using the adviser's most recent financial records, or $25,000,000, whichever is less;

(c) $200,000;

(d) the amount determined to be appropriate by a resolution of the adviser's board of directors or individuals acting in a similar capacity for the firm.

12.5 Insurance -- investment fund manager

(1) A registered investment fund manager must maintain bonding or insurance

(a) that contains the clauses set out in Appendix A [bonding and insurance clauses], and

(b) that provides for a double aggregate limit or a full reinstatement of coverage.

(2) A registered investment fund manager must maintain bonding or insurance in respect of each clause set out in Appendix A in the highest of the following amounts for each clause:

(a) one per cent of assets under management, as calculated using the investment fund manager's most recent financial records, or $25,000,000, whichever is less;

(b) one per cent of the investment fund manager's total assets, as calculated using the investment fund manager's most recent financial records, or $25,000,000, whichever is less;

(c) $200,000;

(d) the amount determined to be appropriate by a resolution of the investment fund manager's board of directors or individuals acting in a similar capacity for the firm.

12.6 Global bonding or insurance

A registered firm may not maintain bonding or insurance under this Division that benefits, or names as an insured, another person or company unless the bond provides, without regard to the claims, experience or any other factor referable to that other person or company, the following:

(a) the registered firm has the right to claim directly against the insurer in respect of losses, and any payment or satisfaction of those losses must be made directly to the registered firm;

(b) the individual or aggregate limits under the policy may only be affected by claims made by or on behalf of

(i) the registered firm, or

(ii) a subsidiary of the registered firm whose financial results are consolidated with those of the registered firm.

12.7 Notifying the regulator or the securities regulatory authority of a change, claim or cancellation

A registered firm must, as soon as possible, notify the regulator or, in Québec, the securities regulatory authority in writing of any change in, claim made under, or cancellation of any insurance policy required under this Division.

Division 3 Audits

12.8 Direction by the regulator or the securities regulatory authority to conduct an audit or review

A registered firm must direct its auditor in writing to conduct any audit or review required by the regulator or, in Québec, the securities regulatory authority during its registration and must deliver a copy of the direction to the regulator or the securities regulatory authority

(a) with its application for registration, and

(b) no later than the 10th day after the registered firm changes its auditor.

12.9 Co-operating with the auditor

A registrant must not withhold, destroy or conceal any information or documents or otherwise fail to cooperate with a reasonable request made by an auditor of the registered firm in the course of an audit.

Division 4 Financial reporting

12.10 Annual financial statements

(1) Annual financial statements delivered to the regulator or, in Québec, the securities regulatory authority under this Division for financial years beginning on or after January 1, 2011 must include the following:

(a) a statement of comprehensive income, a statement of changes in equity and a statement of cash flows, each prepared for the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any;

(b) a statement of financial position, signed by at least one director of the registered firm, as at the end of the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any;

(c) notes to the financial statements.

(2) The annual financial statements delivered to the regulator or, in Québec, the securities regulatory authority under this Division must be audited.

12.11 Interim financial information

(1) Interim financial information delivered to the regulator or, in Québec, the securities regulatory authority under this Division for interim periods relating to financial years beginning on or after January 1, 2011 may be limited to the following:

(a) a statement of comprehensive income for the 3-month period ending on the last day of the interim period and for the same period of the immediately preceding financial year, if any;

(b) a statement of financial position, signed by at least one director of the registered firm, as at the end of the interim period and as at the end of the same interim period of the immediately preceding financial year, if any.

(2) The interim financial information delivered to the regulator or, in Québec, the securities regulatory authority under this Division must be prepared using the same accounting principles that the registered firm uses to prepare its annual financial statements.

12.12 Delivering financial information -- dealer

(1) A registered dealer must deliver the following to the regulator or, in Québec, the securities regulatory authority no later than the 90th day after the end of its financial year:

(a) its annual financial statements for the financial year;

(b) a completed Form 31-103F1 Calculation of Excess Working Capital, showing the calculation of the dealer's excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any.

(2) A registered dealer must deliver the following to the regulator or, in Québec, the securities regulatory authority no later than the 30th day after the end of the first, second and third interim period of its financial year:

(a) its interim financial information for the interim period;

(b) a completed Form 31-103F1 Calculation of Excess Working Capital, showing the calculation of the dealer's excess working capital as at the end of the interim period and as at the end of the immediately preceding interim period, if any.

(2.1) If a registered firm is a member of the MFDA and is registered as an exempt market dealer or scholarship plan dealer, the firm is exempt from paragraphs (1)(b) and (2)(b) if all of the following apply:

(a) the firm has a minimum capital of not less than $50,000 as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report;

(b) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 90th day after the end of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any;

(c) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 30th day after the end of the first, second and third interim period of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the interim period and as at the end of the immediately preceding month, if any.

(3) Subsection (2) does not apply to an exempt market dealer unless it is also registered in another category.

12.13 Delivering financial information -- adviser

A registered adviser must deliver the following to the regulator or, in Québec, the securities regulatory authority no later than the 90th day after the end of its financial year:

(a) its annual financial statements for the financial year;

(b) a completed Form 31-103F1 Calculation of Excess Working Capital, showing the calculation of the adviser's excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any.

12.14 Delivering financial information -- investment fund manager

(1) A registered investment fund manager must deliver the following to the regulator or, in Québec, the securities regulatory authority no later than the 90th day after the end of its financial year:

(a) its annual financial statements for the financial year;

(b) a completed Form 31-103F1 Calculation of Excess Working Capital, showing the calculation of the investment fund manager's excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any;

(c) a description of any net asset value adjustment made in respect of an investment fund managed by the investment fund manager during the financial year.

(2) A registered investment fund manager must deliver the following to the regulator or, in Québec, the securities regulatory authority no later than the 30th day after the end of the first, second and third interim period of its financial year:

(a) its interim financial information for the interim period;

(b) a completed Form 31-103F1 Calculation of Excess Working Capital, showing the calculation of the investment fund manager's excess working capital as at the end of the interim period and as at the end of the immediately preceding interim period, if any;

(c) a description of any net asset value adjustment made in respect of an investment fund managed by the investment fund manager during the interim period.

(3) A description of a net asset value adjustment referred to in this section must include the following:

(a) the name of the fund;

(b) assets under administration of the fund;

(c) the cause of the adjustment;

(d) the dollar amount of the adjustment;

(e) the effect of the adjustment on net asset value per unit or share and any corrections made to purchase and sale transactions affecting either the investment fund or security holders of the investment fund.

(4) If a registered firm is a member of IIROC and is registered as an investment fund manager, the firm is exempt from paragraphs (1)(b) and (2)(b) if

(a) the firm has a minimum capital of not less than $100,000, as calculated in accordance with IIROC Form 1 Joint Regulatory Financial Questionnaire and Report;

(b) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed IIROC Form 1 Joint Regulatory Financial Questionnaire and Report, no later than the 90th day after the end of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any, and

(c) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed IIROC Form 1 Joint Regulatory Financial Questionnaire and Report, no later than the 30th day after the end of the first, second and third interim period of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the interim period and as at the end of the immediately preceding month, if any.

(5) If a registered firm is a member of the MFDA and is registered as an investment fund manager, the firm is exempt from paragraphs (1)(b) and (2)(b) if

(a) the firm has a minimum capital of not less than $100,000, as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report,

(b) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 90th day after the end of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any, and

(c) the firm delivers to the regulator or, in Québec, the securities regulatory authority a completed MFDA Form 1 MFDA Financial Questionnaire and Report, no later than the 30th day after the end of the first, second and third interim period of its financial year, that shows the calculation of the firm's risk adjusted capital as at the end of the interim period and as at the end of the immediately preceding month, if any.

12.15 Exemptions for financial years beginning in 2011

(1) Despite subsections 12.10(1), 12.11(1), 12.12(1) and (2), 12.13 and 12.14(1) and (2), the annual financial statements, the interim financial information, and the completed Form 31-103F1 Calculation of Excess Working Capital, for a financial year beginning in 2011 or for interim periods relating to a financial year beginning in 2011 may exclude comparative information for the preceding financial period.

(2) Despite subsection 12.12(2), the first interim financial information, and the first completed Form 31-103F1 Calculation of Excess Working Capital, required to be delivered in respect of an interim period beginning on or after January 1, 2011 must be delivered no later than the 45th day after the end of the interim period.

(3) Despite subsection 12.14(2), the first interim financial information, the first completed Form 31-103F1 Calculation of Excess Working Capital, and the description of any net asset value adjustment, required to be delivered in respect of an interim period beginning on or after January 1, 2011 must be delivered no later than the 45th day after the end of the interim period.

Part 13 Dealing with clients -- individuals and firms

Division 1 Know your client and suitability

13.1 Investment fund managers exempt from this Division

This Division does not apply to an investment fund manager in respect of its activities as an investment fund manager.

13.2 Know your client

(1) For the purpose of paragraph 2(b) in Ontario, Nova Scotia and New Brunswick, "insider" has the meaning ascribed to that term in theSecurities Act except that "reporting issuer", as it appears in the definition of "insider", is to be read as "reporting issuer or any other issuer whose securities are publicly traded".

(2) A registrant must take reasonable steps to

(a) establish the identity of a client and, if the registrant has cause for concern, make reasonable inquiries as to the reputation of the client,

(b) establish whether the client is an insider of a reporting issuer or any other issuer whose securities are publicly traded,

(c) ensure that it has sufficient information regarding all of the following to enable it to meet its obligations under section 13.3 or, if applicable, the suitability requirement imposed by an SRO:

(i) the client's investment needs and objectives;

(ii) the client's financial circumstances;

(iii) the client's risk tolerance, and

(d) establish the creditworthiness of the client if the registered firm is financing the client's acquisition of a security.

(3) For the purpose of establishing the identity of a client that is a corporation, partnership or trust, the registrant must establish the following:

(a) the nature of the client's business;

(b) the identity of any individual who,

(i) in the case of a corporation, is a beneficial owner of, or exercises direct or indirect control or direction over, more than 25% of the voting rights attached to the outstanding voting securities of the corporation, or

(ii) in the case of a partnership or trust, exercises control over the affairs of the partnership or trust.

(4) A registrant must take reasonable steps to keep the information required under this section current.

(5) This section does not apply if the client is a registered firm, a Canadian financial institution or a Schedule III bank.

(6) Paragraph (2)(c) does not apply to a registrant in respect of a permitted client if

(a) the permitted client has waived, in writing, the requirements under subsections 13.3(1) and (2), and

(b) the registrant does not act as an adviser in respect of a managed account of the permitted client.

(7) Paragraph (2)(b) does not apply to a registrant in respect of a client for which the registrant only trades securities referred to in paragraphs 7.1(2)(b) and (2)(c).

13.3 Suitability

(1) A registrant must take reasonable steps to ensure that, before it makes a recommendation to or accepts an instruction from a client to buy or sell a security, or makes a purchase or sale of a security for a client's managed account, the purchase or sale is suitable for the client.

(2) If a client instructs a registrant to buy, sell or hold a security and in the registrant's reasonable opinion following the instruction would not be suitable for the client, the registrant must inform the client of the registrant's opinion and must not buy or sell the security unless the client instructs the registrant to proceed nonetheless.

(3) This section does not apply if the client is a registered firm, a Canadian financial institution or a Schedule III bank.

(4) This section does not apply to a registrant in respect of a permitted client if

(a) the permitted client has waived, in writing, the requirements under this section, and

(b) the registrant does not act as an adviser in respect of a managed account of the permitted client.

Division 2 Conflicts of interest

13.4 Identifying and responding to conflicts of interest

(1) A registered firm must take reasonable steps to identify existing material conflicts of interest, and material conflicts of interest that the registered firm in its reasonable opinion would expect to arise, between the firm, including each individual acting on the firm's behalf, and a client.

(2) A registered firm must respond to an existing or potential conflict of interest identified under subsection (1).

(3) If a reasonable investor would expect to be informed of a conflict of interest identified under subsection (1), the registered firm must disclose, in a timely manner, the nature and extent of the conflict of interest to the client whose interest conflicts with the interest identified.

(4) This section does not apply to an investment fund manager in respect of an investment fund that is subject to National Instrument 81-107Independent Review Committee for Investment Funds.

13.5 Restrictions on certain managed account transactions

(1) In this section, "responsible person" means, for a registered adviser,

(a) the adviser,

(b) a partner, director or officer of the adviser, and

(c) each of the following who has access to, or participates in formulating, an investment decision made on behalf of a client of the adviser or advice to be given to a client of the adviser:

(i) an employee or agent of the adviser;

(ii) an affiliate of the adviser;

(iii) a partner, director, officer, employee or agent of an affiliate of the adviser.

(2) A registered adviser must not knowingly cause an investment portfolio managed by it, including an investment fund for which it acts as an adviser, to do any of the following:

(a) purchase a security of an issuer in which a responsible person, or an associate of a responsible person is a partner, officer or director unless

(i) this fact is disclosed to the client, and

(ii) the written consent of the client to the purchase is obtained before the purchase;

(b) purchase or sell a security from or to the investment portfolio of any of the following:

(i) a responsible person;

(ii) an associate of a responsible person;

(iii) an investment fund for which a responsible person acts as an adviser;

(c) provide a guarantee or loan to a responsible person or an associate of a responsible person.

13.6 Disclosure when recommending related or connected securities

A registered firm must not make a recommendation in any medium of communication to buy, sell or hold a security issued by the registered firm, a security of a related issuer or, during the security's distribution, a security of a connected issuer of the registered firm, unless any of the following apply:

(a) the firm discloses, in the same medium of communication, the nature and extent of the relationship or connection between the firm and the issuer;

(b) the recommendation is in respect of a security of a mutual fund, a scholarship plan, an educational plan or an educational trust that is an affiliate of, or is managed by an affiliate of, the registered firm and the names of the registered firm and the fund, plan or trust, as the case may be, are sufficiently similar to indicate that they are affiliated.

Division 3 Referral arrangements

13.7 Definitions -- referral arrangements

In this Division

"client" includes a prospective client;

"referral arrangement" means any arrangement in which a registrant agrees to pay or receive a referral fee;

"referral fee" means any form of compensation, direct or indirect, paid for the referral of a client to or from a registrant.

13.8 Permitted referral arrangements

A registered firm, or a registered individual whose registration is sponsored by the registered firm, must not participate in a referral arrangement with another person or company unless,

(a) before a client is referred by or to the registrant, the terms of the referral arrangement are set out in a written agreement between the registered firm and the person or company;

(b) the registered firm records all referral fees, and

(c) the registrant ensures that the information prescribed by subsection 13.10(1) [disclosing referral arrangements to clients] is provided to the client in writing before the party receiving the referral either opens an account for the client or provides services to the client.

13.9 Verifying the qualifications of the person or company receiving the referral

A registered firm, or a registered individual whose registration is sponsored by the registered firm, must not refer a client to another person or company unless the firm first takes reasonable steps to satisfy itself that the person or company has the appropriate qualifications to provide the services, and if applicable, is registered to provide those services.

13.10 Disclosing referral arrangements to clients

(1) The written disclosure of the referral arrangement required by subsection 13.8(c) [permitted referral arrangements] must include the following:

(a) the name of each party to the agreement referred to in paragraph 13.8(a);

(b) the purpose and material terms of the agreement, including the nature of the services to be provided by each party;

(c) any conflicts of interest resulting from the relationship between the parties to the agreement and from any other element of the referral arrangement;

(d) the method of calculating the referral fee and, to the extent possible, the amount of the fee;

(e) the category of registration of each registrant that is a party to the agreement with a description of the activities that the registrant is authorized to engage in under that category and, giving consideration to the nature of the referral, the activities that the registrant is not permitted to engage in;

(f) if a referral is made to a registrant, a statement that all activity requiring registration resulting from the referral arrangement will be provided by the registrant receiving the referral;

(g) any other information that a reasonable client would consider important in evaluating the referral arrangement.

(2) If there is a change to the information set out in subsection (1), the registrant must ensure that written disclosure of that change is provided to each client affected by the change as soon as possible and no later than the 30th day before the date on which a referral fee is next paid or received.

13.11 Referral arrangements before this Instrument came into force

(1) This Division applies to a referral arrangement entered into before this Instrument came into force if a referral fee is paid under the referral arrangement after this Instrument comes into force.

(2) Subsection (1) does not apply until 6 months after this Instrument comes into force.

Division 4 Loans and margin

13.12 Restriction on lending to clients

(1) A registrant must not lend money, extend credit or provide margin to a client.

(2) Notwithstanding subsection (1), an investment fund manager may lend money on a short term basis to an investment fund it manages, if the loan is for the purpose of funding redemptions of its securities or meeting expenses incurred by the investment fund in the normal course of its business.

13.13 Disclosure when recommending the use of borrowed money

(1) If a registrant recommends that a client should use borrowed money to finance any part of a purchase of a security, the registrant must, before the purchase, provide the client with a written statement that is substantially similar to the following:

"Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines."

(2) Subsection (1) does not apply if one of the following applies:

(a) the registrant has provided the client with the statement described under subsection (1) no earlier than the 180th day before the date of the proposed purchase;

(b) [repealed]

(c) the client is a permitted client.

Division 5 Complaints

13.14 Application of this Division

(1) This Division does not apply to an investment fund manager in respect of its activities as an investment fund manager.

(2) In Québec, a registered firm is deemed to comply with this Division if it complies with sections 168.1.1 to 168.1.3 of the Securities Act (Québec).

13.15 Handling complaints

A registered firm must document and, in a manner that a reasonable investor would consider fair and effective, respond to each complaint made to the registered firm about any product or service offered by the firm or a representative of the firm.

13.16 Dispute resolution service

(1) A registered firm must ensure that independent dispute resolution or mediation services are made available, at the firm's expense, to a client to resolve a complaint made by the client about any trading or advising activity of the firm or one of its representatives.

(2) If a person or company makes a complaint to a registered firm about any trading or advising activity of the firm or one of its representatives, the registered firm must as soon as possible inform the person or company of how to contact and use the dispute resolution or mediation services which are provided to the firm's clients.

Part 14 Handling client accounts -- firms

Division 1 Exemption for investment fund managers

14.1 Investment fund managers exempt from Part 14

Other than sections 14.6 [holding client assets in trust], 14.12(5) [content and delivery of trade confirmation] and 14.14 [account statements], this Part does not apply to an investment fund manager in respect of its activities as an investment fund manager.

Division 2 Disclosure to clients

14.2 Relationship disclosure information

(1) 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.

(2) The information required to be delivered under subsection (1) includes all of the following:

(a) a description of the nature or type of the client's account;

(b) a discussion that identifies the products or services the registered firm offers to a client;

(c) a description of the types of risks that a client should consider when making an investment decision;

(d) a description of the risks to a client of using borrowed money to finance a purchase of a security;

(e) a description of the conflicts of interest that the registered firm is required to disclose to a client under securities legislation;

(f) disclosure of all costs to a client for the operation of an account;

(g) a description of the costs a client will pay in making, holding and selling investments;

(h) a description of the compensation paid to the registered firm in relation to the different types of products that a client may purchase through the registered firm;

(i) a description of the content and frequency of reporting for each account or portfolio of a client;

(j) if section 13.16 applies to the registered firm, disclosure that independent dispute resolution or mediation services are available at the registered firm's expense, to resolve any dispute that might arise between the client and the firm about any trading or advising activity of the firm or one of its representatives;

(k) a statement that the registered firm has an obligation to assess whether a purchase or sale of a security is suitable for a client prior to executing the transaction or at any other time;

(l) the information a registered firm must collect about the client under section 13.2 [know your client].

(3) A registered firm must deliver to a client the information in subsection (1) before the firm first

(a) purchases or sells a security for the client, or

(b) advises the client to purchase, sell or hold a security.

(4) If there is a significant change to the information delivered to a client under subsection (1), the registered firm must take reasonable steps to notify the client of the change in a timely manner and, if possible, before the firm next

(a) purchases or sells a security for the client, or

(b) advises the client to purchase, sell or hold a security.

(5) This section does not apply if the client is a registered firm, a Canadian financial institution or a Schedule III bank.

(6) This section does not apply to a registrant in respect of a permitted client if

(a) the permitted client has waived, in writing, the requirements under this section, and

(b) the registrant does not act as an adviser in respect of a managed account of the permitted client.

14.3 Disclosure to clients about the fair allocation of investment opportunities

A registered adviser must deliver to a client a summary of the policies required under section 11.1 [compliance system] that provide reasonable assurance that the firm and each individual acting on its behalf complies with section 14.10 [allocating investment opportunities fairly] and that summary must be delivered

(a) when the adviser opens an account for the client, and

(b) if there is a significant change to the summary last delivered to the client, in a timely manner and, if possible, before the firm next

(i) purchases or sells a security for the client, or

(ii) advises the client to purchase, sell or hold a security.

14.4 When the firm has a relationship with a financial institution

(1) If a registered firm opens a client account to trade in securities, in an office or branch of a Canadian financial institution or a Schedule III bank, the registered firm must give the client a written notice stating that it is a separate legal entity from the Canadian financial institution or Schedule III bank and, unless otherwise advised by the registrant, securities purchased from or through the registrant

(a) are not insured by a government deposit insurer,

(b) are not guaranteed by the Canadian financial institution or Schedule III bank, and

(c) may fluctuate in value.

(2) A registered firm that is subject to subsection (1) must receive a written confirmation from the client that the client has read and understood the notice before the registered firm

(a) purchases or sells a security for the client, or

(b) advises the client to purchase, sell or hold a security.

(3) This section does not apply to a registered firm if the client is a permitted client.

14.5 Notice to clients by non-resident registrants

(1) A registered firm whose head office is not located in the local jurisdiction must provide a client in the local jurisdiction with a statement in writing disclosing the following:

(a) the firm is not resident in the local jurisdiction;

(b) the jurisdiction in Canada or the foreign jurisdiction in which the head office or the principal place of business of the firm is located;

(c) all or substantially all of the assets of the firm may be situated outside the local jurisdiction;

(d) there may be difficulty enforcing legal rights against the firm because of the above;

(e) the name and address of the agent for service of process of the firm in the local jurisdiction.

(2) This section does not apply to a registered firm whose head office is in Canada if the firm is registered in the local jurisdiction.

Division 3 Client assets

14.6 Holding client assets in trust

A registered firm that holds client assets must hold the assets

(a) separate and apart from its own property,

(b) in trust for the client, and

(c) in the case of cash, in a designated trust account at a Canadian financial institution, a Schedule III bank, or a member of IIROC.

14.7 Holding client assets -- non-resident registrants

(1) A registered firm whose head office is not located in a jurisdiction of Canada must ensure that all client assets are held

(a) in the client's name,

(b) on behalf of the client by a custodian or sub-custodian that

(i) meets the guidelines prescribed for acting as a sub-custodian of the portfolio securities of a mutual fund in Part 6 of National Instrument 81-102 Mutual Funds, and

(ii) is subject to the Bank for International Settlements' framework for international convergence of capital measurement and capital standards, or

(c) on behalf of the client by a registered dealer that is a member of an SRO and that is a member of Canadian Investor Protection Fund or other comparable compensation fund or contingency trust fund.

(2) Section 14.6 [holding client assets in trust] does not apply to a registered firm that is subject to subsection (1).

14.8 Securities subject to a safekeeping agreement

A registered firm that holds unencumbered securities for a client under a written safekeeping agreement must

(a) segregate the securities from all other securities,

(b) identify the securities as being held in safekeeping for the client in

(i) the registrant's security position record,

(ii) the client's ledger, and

(iii) the client's statement of account, and

(c) release the securities only on an instruction from the client.

14.9 Securities not subject to a safekeeping agreement

(1) A registered firm that holds unencumbered securities for a client other than under a written safekeeping agreement must

(a) segregate and identify the securities as being held in trust for the client, and

(b) describe the securities as being held in segregation on

(i) the registrant's security position record,

(ii) the client's ledger, and

(iii) the client's statement of account.

(2) Securities described in subsection (1) may be segregated in bulk.

Division 4 Client accounts

14.10 Allocating investment opportunities fairly

A registered adviser must ensure fairness in allocating investment opportunities among its clients.

14.11 Selling or assigning client accounts

If a registered firm proposes to sell or assign a client's account in whole or in part to another registrant, the registered firm must, prior to the sale or assignment, give a written explanation of the proposal to the client and inform the client of the client's right to close the client's account.

Division 5 Account activity reporting

14.12 Content and delivery of trade confirmation

(1) A registered dealer that has acted on behalf of a client in connection with a purchase or sale of a security must promptly deliver to the client or, if the client consents in writing, to a registered adviser acting for the client, a written confirmation of the transaction, setting out the following:

(a) the quantity and description of the security purchased or sold;

(b) the price per security paid or received by the client;

(c) the commission, sales charge, service charge and any other amount charged in respect of the transaction;

(d) whether the registered dealer acted as principal or agent;

(e) the date and the name of the marketplace, if any, on which the transaction took place, or if applicable, a statement that the transaction took place on more than one marketplace or over more than one day;

(f) the name of the dealing representative, if any, in the transaction;

(g) the settlement date of the transaction;

(h) if applicable, that the security is a security of the registrant, a security of a related issuer of the registrant or, if the transaction occurred during the security's distribution, a security of a connected issuer of the registered dealer.

(2) If a transaction under subsection (1) involved more than one transaction or if the transaction took place on more than one marketplace the information referred to in subsection (1) may be set out in the aggregate if the confirmation also contains a statement that additional details concerning the transaction will be provided to the client upon request and without additional charge.

(3) Paragraph (1)(h) does not apply if all of the following apply:

(a) the security is a security of a mutual fund that is established and managed by the registered dealer or by an affiliate of the registered dealer, in its capacity as investment fund manager of the mutual fund;

(b) the names of the dealer and the mutual fund are sufficiently similar to indicate that they are affiliated or related.

(4) For the purpose of paragraph (1)(f), a dealing representative may be identified by means of a code or symbol if the confirmation also contains a statement that the name of the dealing representative will be provided to the client on request of the client.

(5) A registered investment fund manager that has executed a redemption order received directly from a security holder must promptly deliver to the security holder a written confirmation of the redemption, setting out the following:

(a) the quantity and description of the security redeemed;

(b) the price per security received by the client;

(c) the commission, sales charge, service charge and any other amount charged in respect of the redemption;

(d) the settlement date of the redemption.

(6) Section 14.12(5) does not apply to trades in a security of an investment fund made in reliance on section 8.6.

14.13 Confirmations for certain automatic plans

The requirement under section 14.12 [content and delivery of trade confirmation] to deliver a confirmation promptly does not apply to a registered dealer in respect of a transaction if all of the following apply:

(a) the client gave the dealer prior written notice that the transaction is made pursuant to the client's participation in an automatic payment plan, including a dividend reinvestment plan, or an automatic withdrawal plan in which a transaction is made at least monthly;

(b) the registered dealer delivered a confirmation as required under section 14.12 [content and delivery of trade confirmation] for the first transaction made under the plan after receiving the notice referred to in paragraph (a);

(c) the transaction is in a security of a mutual fund, scholarship plan, educational plan or educational trust.

(d) [repealed]

14.14 Account statements

(1) A registered dealer must deliver a statement to a client at least once every 3 months.

(2) Despite subsection (1), a registered dealer must deliver a statement to a client at the end of a month if any of the following apply:

(a) the client has requested receiving statements on a monthly basis;

(b) during the month, a transaction was effected in the account other than a transaction made under an automatic withdrawal plan or an automatic payment plan, including a dividend reinvestment plan.

(2.1) Subsection (2) does not apply to a mutual fund dealer in connection with its activities as a dealer in respect of the securities listed in section 7.1(2)(b).

(3) Except if the client has otherwise directed, a registered adviser must deliver a statement to a client at least once every 3 months.

(3.1) If there is no dealer of record for a security holder on the records of a registered investment fund manager, the investment fund manager must deliver a statement to the security holder at least once every 12 months.

(4) A statement delivered under subsection (1), (2), (3), or (3.1) must include all of the following information for each transaction made for the client or security holder during the period covered by the statement:

(a) the date of the transaction;

(b) the type of transaction;

(c) the name of the security;

(d) the number of securities;

(e) the price per security;

(f) the total value of the transaction.

(5) A statement delivered under subsection (1), (2), (3), or (3.1) must include all of the following information about the client's or security holder's account as at the end of the period for which the statement is made:

(a) the name and quantity of each security in the account;

(b) the market value of each security in the account;

(c) the total market value of each security position in the account;

(d) any cash balance in the account;

(e) the total market value of all cash and securities in the account.

(6) Subsections (1) and (2) do not apply to a scholarship plan dealer if both of the following apply:

(a) the dealer is not registered in another dealer or adviser category;

(b) the dealer delivers to the client a statement at least once every 12 months that provides the information in subsections (4) and (5).

Part 15 Granting an exemption

15.1 Who can grant an exemption

(1) The regulator or, in Québec, the securities regulatory authority may grant an exemption from 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.

(3) Except in Ontario, an exemption referred to in subsection (1) is granted under the statute referred to in Appendix B of National Instrument 14-101 Definitions opposite the name of the local jurisdiction.

Part 16 Transition

16.1 Change of registration categories - individuals

On the day this Instrument comes into force, an individual registered in a category referred to in

(a) column 1 of Appendix C [new category names - individuals], opposite the name of the local jurisdiction, is registered as a dealing representative,

(b) column 2 of Appendix C [new category names - individuals], opposite the name of the local jurisdiction, is registered as an advising representative, and

(c) column 3 of Appendix C [new category names - individuals], opposite the name of the local jurisdiction, is registered as an associate advising representative.

16.2 Change of registration categories - firms

On the day this Instrument comes into force, a person or company registered in a category referred to in

(a) column 1 of Appendix D [new category names - firms], opposite the name of the local jurisdiction, is registered as an investment dealer,

(b) column 2 of Appendix D [new category names - firms], opposite the name of the local jurisdiction, is registered as a mutual fund dealer,

(c) column 3 of Appendix D [new category names - firms], opposite the name of the local jurisdiction, is registered as a scholarship plan dealer,

(d) column 4 of Appendix D [new category names - firms], opposite the name of the local jurisdiction, is registered as a restricted dealer,

(e) column 5 of Appendix D [new category names - firms], opposite the name of the local jurisdiction, is registered as a portfolio manager, and

(f) column 6 of Appendix D [new category names - firms], opposite the name of the local jurisdiction, is registered as a restricted portfolio manager.

16.3 Change of registration categories - limited market dealers

(1) This section applies in Ontario and Newfoundland and Labrador.

(2) On the day this Instrument comes into force, a person or company registered as a limited market dealer is registered as an exempt market dealer.

(3) On the day this Instrument comes into force, an individual registered to trade on behalf of a limited market dealer is registered as a dealing representative of the dealer.

(4) Sections 12.1 [capital requirements] and 12.2 [notifying the regulator of a subordination agreement] do not apply to a person or company registered as an exempt market dealer under subsection (2) until one year after this Instrument comes into force.

(5) Sections 12.3 [insurance - dealer] and 12.7 [notifying the regulator of a change, claim or cancellation] do not apply to a person or company registered as an exempt market dealer under subsection (2) until 6 months after this Instrument comes into force.

16.4 Registration for investment fund managers active when this Instrument comes into force

(1) The requirement to register as an investment fund manager does not apply to a person or company that is acting as an investment fund manager on the day this Instrument comes into force

(a) until one year after this Instrument comes into force, or

(b) if the person or company applies for registration as an investment fund manager within one year after this Instrument comes into force, until the regulator or, in Québec, the securities regulatory authority has accepted or refused the registration.

(2) Subsection (1) is repealed one year after this Instrument comes into force.

(3) Section 12.5 [insurance - investment fund manager] does not apply to a registered dealer or a registered adviser that is acting as an investment fund manager on the day this Instrument comes into force.

(4) Subsection (3) is repealed one year after this Instrument comes into force.

16.5 Temporary exemption for Canadian investment fund manager registered in its principal jurisdiction

(1) A person or company is not required to register in the local jurisdiction as an investment fund manager if it is registered, or has applied for registration, as an investment fund manager in the jurisdiction of Canada in which its head office is located.

(2) Subsection (1) is repealed on September 28, 2012.

16.6 Temporary exemption for foreign investment fund managers

(1) The investment fund manager registration requirement does not apply to a person or company that is acting as an investment fund manager if its head office is in not in a jurisdiction of Canada.

(2) Subsection (1) is repealed on September 28, 2012.

16.7 Registration of exempt market dealers

(1) This section does not apply in Ontario and Newfoundland and Labrador.

(2) In this section, "the exempt market" means those trading and underwriting activities listed in subparagraph 7.1(2)(d) [dealer categories].

(3) The requirement to register as an exempt market dealer does not apply to a person or company that acts as a dealer in the exempt market on the day this Instrument comes into force

(a) until one year after this Instrument comes into force, or

(b) if the person or company applies for registration as an exempt market dealer within one year after this Instrument comes into force, until the regulator or, in Québec, the securities regulatory authority has accepted or refused the registration.

(4) The requirement to register as a dealing representative of an exempt market dealer does not apply to an individual who acts as a dealer in the exempt market on the day this Instrument comes into force

(a) until one year after this Instrument comes into force, or

(b) if the individual applies to be registered as a dealing representative of an exempt market dealer within one year after this Instrument comes into force, until the regulator or, in Québec, the securities regulatory authority has accepted or refused the registration.

16.8 Registration of ultimate designated persons

If a person or company is a registered firm on the day this Instrument comes into force, section 11.2 [designating an ultimate designated person] does not apply to the firm

(a) until 3 months after this Instrument comes into force, or

(b) if an individual applies to be registered as the ultimate designated person of the firm within 3 months after this Instrument comes into force, until the regulator or, in Québec, the securities regulatory authority has accepted or refused the registration.

16.9 Registration of chief compliance officers

(1) If a person or company is a registered firm on the date this Instrument comes into force, section 11.3 [designating a chief compliance officer] does not apply to the firm

(a) until 3 months after this Instrument comes into force, or

(b) if an individual applies to be registered as the chief compliance officer of the firm within 3 months after this Instrument comes into force, until the regulator or, in Québec, the securities regulatory authority has accepted or refused the registration.

(2) If an individual applies to be registered as the chief compliance officer of a registered firm within 3 months after this Instrument comes into force and the individual was identified on the National Registration Database as the firm's compliance officer in a jurisdiction of Canada on the date this Instrument came into force, the following sections do not apply in respect of the individual so long as he or she remains registered as the firm's chief compliance officer:

(a) section 3.6 [mutual fund dealer - chief compliance officer], if the registered firm is a mutual fund dealer;

(b) section 3.8 [scholarship plan dealer - chief compliance officer], if the registered firm is a scholarship plan dealer;

(c) section 3.10 [exempt market dealer - chief compliance officer], if the registered firm is an exempt market dealer;

(d) section 3.13 [portfolio manager - chief compliance officer], if the registered firm is a portfolio manager.

(3) If an individual applies to be registered as the chief compliance officer of a registered firm within 3 months after this Instrument comes into force and the individual was not identified on the National Registration Database as the firm's compliance officer on the date this Instrument came into force, the following sections do not apply in respect of the individual until one year after this Instrument comes into force:

(a) section 3.6 [mutual fund dealer -- chief compliance officer], if the registered firm is a mutual fund dealer;

(b) section 3.8 [scholarship plan dealer -- chief compliance officer], if the registered firm is a scholarship plan dealer;

(c) section 3.10 [exempt market dealer -- chief compliance officer], if the registered firm is an exempt market dealer;

(d) section 3.13 [portfolio manager -- chief compliance officer], if the registered firm is a portfolio manager.

(4) In Ontario and Newfoundland and Labrador, despite paragraphs 2(c) and (3)(c), if an individual applies to be registered as the chief compliance officer of an exempt market dealer within 3 months after this Instrument comes into force, section 3.10 [exempt market dealer - chief compliance officer] does not apply in respect of the individual until one year after this Instrument comes into force.

16.10 Proficiency for dealing and advising representatives

(1) Subject to subsections (2) and (3), if an individual is registered in a jurisdiction of Canada as a dealing or advising representative in a category referred to in a section of Division 2 of Part 3 [education and experience requirements] on the day this Instrument comes into force, that section does not apply to the individual so long as the individual remains registered in the category.

(2) Section 3.7 [scholarship plan dealer - dealing representative] does not apply to an individual until one year after this Instrument comes into force if the individual is registered as a dealing representative of a scholarship plan dealer on the day this Instrument comes into force.

(3) In Ontario and Newfoundland and Labrador, section 3.9 [exempt market dealer - dealing representative] does not apply to an individual until one year after this Instrument comes into force if the individual is registered as a dealing representative of an exempt market dealer on the day this Instrument comes into force.

16.11 Capital requirements

(1) A person or company that is a registered firm on the day this Instrument comes into force is exempt from sections 12.1 [capital requirements] and 12.2 [notifying the regulator of a subordination agreement] if it complies with each provision listed in Appendix E [non-harmonized capital requirements] across from the name of the firm's principal jurisdiction.

(2) Subsection (1) is repealed one year after this Instrument comes into force.

16.12 Continuation of existing discretionary relief

A person or company that was entitled to rely on an exemption, waiver or approval granted to it by a regulator or securities regulatory authority relating to a requirement under securities legislation or securities directions existing immediately before this Instrument came into force is exempt from any substantially similar provision of this Instrument to the same extent and on the same conditions, if any, as contained in the exemption, waiver or approval.

16.13 Insurance requirements

(1) A person or company that is a registered firm on the day this Instrument comes into force is exempt from sections 12.3 [insurance - dealer] to 12.7 [notifying the regulator of a change, claim or cancellation] if it complies with each provision listed in Appendix F [non-harmonized insurance requirements] across from the name of the firm's principal jurisdiction.

(2) In Québec, subsection (1), does not apply to a registered firm that is a mutual fund dealer or a scholarship plan dealer on the day this Instrument comes into force.

(3) Subsections (1) and (2) are repealed 6 months after this Instrument comes into force.

16.14 Relationship disclosure information

(1) Section 14.2 [relationship disclosure information] does not apply to a person or company that is a registrant on the day this Instrument comes into force.

(2) Subsection (1) is repealed one year after this Instrument comes into force.

16.15 Referral arrangements

(1) Division 3 [referral arrangements] of Part 13 does not apply to a person or company that is a registrant on the day this Instrument comes into force.

(2) Subsection (1) is repealed 6 months after this Instrument comes into force.

16.16 Complaint handling

(1) In each jurisdiction of Canada except Québec, section 13.16 [dispute resolution service] does not apply to a person or company that is a registered firm in a jurisdiction of Canada on the day this Instrument comes into force.

(2) Subsection (1) is repealed on September 28, 2012.

16.17 Account statements -- mutual fund dealers

(1) Section 14.14 [account statements] does not apply to a person or company that was, on September 28, 2009, either of the following:

(a) a member of the MFDA;

(b) a mutual fund dealer in Québec, unless it was also a portfolio manager in Québec.

(2) Subsection (1) is repealed on September 28, 2011.

16.18 Transition to exemption -- international dealers

(1) This section applies in Ontario and Newfoundland and Labrador.

(2) If a person or company is registered in the category of international dealer on the day this Instrument comes into force, its registration in that category is revoked.

(3) If a person or company is registered in the category of international dealer on the day this Instrument comes into force, paragraphs 8.18(3)(e) and 8.18(4)(b) [international dealer] do not apply to the person or company until one month after this Instrument comes into force.

16.19 Transition to exemption - international advisers

(1) This section applies in Ontario.

(2) If a person or company is registered in the category of international adviser on the day this Instrument comes into force, its registration in that category is revoked one year after this Instrument comes into force.

(3) If the registration of a person or company is revoked under subsection (2), the registration of each individual registered to act as an adviser on behalf of the person or company is revoked.

(4) If a person or company is registered in the category of international adviser on the day this Instrument comes into force, paragraphs (e) and (f) of subsection 8.26(4) [international adviser] do not apply to the person or company until one year after this Instrument comes into force.

16.20 Transition to exemption - portfolio manager and investment counsel (foreign)

(1) This section applies in Alberta.

(2) If a person or company is registered in the category of portfolio manager and investment counsel (foreign) on the day this Instrument comes into force, its registration in that category is revoked one year after this Instrument comes into force.

(3) If the registration of a person or company is revoked under subsection (2), the registration of each individual registered to act as an adviser on behalf of the person or company is revoked.

(4) If a person or company is registered in the category of portfolio manager and investment counsel (foreign) on the day this Instrument comes into force, paragraphs (e) and (f) of subsection 8.26(4) [international adviser] do not apply to the person or company until one year after this Instrument comes into force.

Part 17 When this Instrument comes into force

17.1 Effective date

(1) Except in Ontario, this Instrument comes into force on September 28, 2009.

(2) In Ontario, this Instrument comes into force on the later of the following:

(a) September 28, 2009;

(b) the day on which sections 4, 5 and subsections 20(1) to (11) of Schedule 26 of the Budget Measures Act, 2009 are proclaimed in force.

 

FORM 31-103F1 CALCULATION OF EXCESS WORKING CAPITAL

____________________

Firm Name

Capital Calculation

(as at ________________ with comparative figures as at ______________)

Component

Current period

Prior period

 

1.

Current assets

__________

__________

 

2.

Less current assets not readily convertible into cash (e.g., prepaid expenses)

__________

__________

 

3.

Adjusted current assets

__________

__________

Line 1 minus line 2 =

 

4.

Current liabilities

__________

__________

 

5.

Add 100% of long-term related party debt unless the firm and the lender have executed a subordination agreement in the form set out in Appendix B and the firm has delivered a copy of the agreement to the regulator or, in Québec, the securities regulatory authority

__________

__________

 

6.

Adjusted current liabilities

__________

__________

Line 4 plus line 5 =

 

7.

Adjusted working capital

__________

__________

Line 3 minus line 6 =

 

8.

Less minimum capital

__________

__________

 

9.

Less market risk

__________

__________

 

10.

Less any deductible under the bonding or insurance policy required under Part 12 of National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations

__________

__________

 

11.

Less Guarantees

__________

__________

 

12.

Less unresolved differences

__________

__________

 

13.

Excess working capital

__________

__________

Notes:

This form must be prepared using the accounting principles that you use to prepare your financial statements in accordance with National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards. Section 12.1 of Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations provides further guidance in respect of these accounting principles.

Line 5. Related-party debt -- Refer to the CICA Handbook for the definition of "related party" for publicly accountable enterprises.

Line 8. Minimum Capital -- The amount on this line must be not less than (a) $25,000 for an adviser and (b) $50,000 for a dealer. For an investment fund manager, the amount must be not less than $100,000 unless subsection 12.1(4) applies.

Line 9. Market Risk -- The amount on this line must be calculated according to the instructions set out in Schedule 1 to this Form.

Line 11. Guarantees -- If the registered firm is guaranteeing the liability of another party, the total amount of the guarantee must be included in the capital calculation. If the amount of a guarantee is included in the firm's statement of financial position as a current liability and is reflected in line 4, do not include the amount of the guarantee on line 11.

Line 12. Unresolved differences -- Any unresolved differences that could result in a loss from either firm or client assets must be included in the capital calculation. The examples below provide guidance as to how to calculate unresolved differences:

(i) If there is an unresolved difference relating to client securities, the amount to be reported on Line 12 will be equal to the fair value of the client securities that are short, plus the applicable margin rate for those securities.

(ii) If there is an unresolved difference relating to the registrant's investments, the amount to be reported on Line 12 will be equal to the fair value of the investments (securities) that are short.

(iii) If there is an unresolved difference relating to cash, the amount to be reported on Line 12 will be equal to the amount of the shortfall in cash.

Please refer to section 12.1 of Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations for further guidance on how to prepare and file this form.

- - - - - - - - - - - - - - - - - - - -

Management Certification

Registered Firm Name: ____________________

We have examined the attached capital calculation and certify that the firm is in compliance with the capital requirements as at ____________________.

Name and Title
Signature
Date
1.
____________________
____________________
____________________
____________________
 
2.
____________________
____________________
____________________
____________________

- - - - - - - - - - - - - - - - - - - -

 

Schedule 1 of Form 31-103F1 Calculation of Excess Working Capital

(calculating line 9 [market risk])

For purposes of completing this form:

(1) "Fair value" means the value of a security determined in accordance with Canadian GAAP applicable to publicly accountable enterprises.

(2) For each security whose value is included in line 1, Current Assets, multiply the fair value of the security by the margin rate for that security set out below. Add up the resulting amounts for all of the securities you hold. The total is the "market risk" to be entered on line 9.

(a) Bonds, Debentures, Treasury Bills and Notes

(i) Bonds, debentures, treasury bills and other securities of or guaranteed by the Government of Canada, of the United Kingdom, of the United States of America and of any other national foreign government (provided such foreign government securities are currently rated Aaa or AAA by Moody's Investors Service, Inc. or Standard & Poor's Corporation, respectively), maturing (or called for redemption):

within 1 year:
1% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
1 % of fair value
over 3 years to 7 years:
2% of fair value
over 7 years to 11 years:
4% of fair value
over 11 years:
4% of fair value

(ii) Bonds, debentures, treasury bills and other securities of or guaranteed by any jurisdiction of Canada and obligations of the International Bank for Reconstruction and Development, maturing (or called for redemption):

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
3 % of fair value
over 3 years to 7 years:
4% of fair value
over 7 years to 11 years:
5% of fair value
over 11 years:
5% of fair value

(iii) Bonds, debentures or notes (not in default) of or guaranteed by any municipal corporation in Canada or the United Kingdom maturing:

within 1 year:
3% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year to 3 years:
5 % of fair value
over 3 years to 7 years:
5% of fair value
over 7 years to 11 years:
5% of fair value
over 11 years:
5% of fair value

(iv) Other non-commercial bonds and debentures, (not in default): 10% of fair value

(v) Commercial and corporate bonds, debentures and notes (not in default) and non-negotiable and non-transferable trust company and mortgage loan company obligations registered in the registered firm's name maturing:

within 1 year:
3% of fair value
over 1 year to 3 years:
6 % of fair value
over 3 years to 7 years:
7% of fair value
over 7 years to 11 years:
10% of fair value
over 11 years:
10% of fair value

(b) Bank Paper

Deposit certificates, promissory notes or debentures issued by a Canadian chartered bank (and of Canadian chartered bank acceptances) maturing:

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year:
apply rates for commercial and corporate bonds, debentures and notes

(c) Acceptable foreign bank paper

Deposit certificates, promissory notes or debentures issued by a foreign bank, readily negotiable and transferable and maturing:

within 1 year:
2% of fair value multiplied by the fraction determined by dividing the number of days to maturity by 365
over 1 year:
apply rates for commercial and corporate bonds, debentures and notes

"Acceptable Foreign Bank Paper" consists of deposit certificates or promissory notes issued by a bank other than a Canadian chartered bank with a net worth (i.e., capital plus reserves) of not less than $200,000,000.

(d) Mutual Funds

Securities of mutual funds qualified by prospectus for sale in any jurisdiction of Canada:

(i) 5% of the net asset value per security as determined in accordance with National Instrument 81-106 Investment Fund Continuous Disclosure, where the fund is a money market mutual fund as defined in National Instrument 81-102 Mutual Funds; or

(ii) the margin rate determined on the same basis as for listed stocks multiplied by the net asset value per security of the fund as determined in accordance with National Instrument 81-106 Investment Fund Continuous Disclosure.

(e) Stocks

In this paragraph, "securities" includes rights and warrants and does not include bonds and debentures.

(i) On securities including investment fund securities, rights and warrants, listed on any exchange in Canada or the United States of America:

Long Positions -- Margin Required

Securities selling at $2.00 or more -- 50% of fair value

Securities selling at $1.75 to $1.99 -- 60% of fair value

Securities selling at $1.50 to $1.74 -- 80% of fair value

Securities selling under $1.50 -- 100% of fair value

Short Positions -- Credit Required

Securities selling at $2.00 or more -- 150% of fair value

Securities selling at $1.50 to $1.99 -- $3.00 per share

Securities selling at $0.25 to $1.49 -- 200% of fair value

Securities selling at less than $0.25 -- fair value plus $0.25 per shares

(ii) For positions in securities that are constituent securities on a major broadly-based index of one of the following exchanges, 50% of the fair value:

(a) Australian Stock Exchange Limited

(b) Bolsa de Madrid

(c) Borsa Italiana

(d) Copenhagen Stock Exchange

(e) Euronext Amsterdam

(f) Euronext Brussels

(g) Euronext Paris S.A.

(h) Frankfurt Stock Exchange

(i) London Stock Exchange

(j) New Zealand Exchange Limited

(k) Stockholm Stock Exchange

(l) Swiss Exchange

(m) The Stock Exchange of Hong Kong Limited

(n) Tokyo Stock Exchange

(f) Mortgages

(i) For a firm registered in any jurisdiction of Canada except Ontario:

(a) Insured mortgages (not in default): 6% of fair value

(b) Mortgages which are not insured (not in default): 12% of fair value of the loan or the rates set by Canadian financial institutions or Schedule III banks, whichever is greater.

(ii) For a firm registered in Ontario:

(a) Mortgages insured under the National Housing Act (Canada) (not in default): 6% of fair value

(b) Conventional first mortgages (not in default): 12% of fair value of the loan or the rates set by Canadian financial institutions or Schedule III banks, whichever is greater.

- - - - - - - - - - - - - - - - - - - -

If you are registered in Ontario regardless of whether you are also registered in another jurisdiction of Canada, you will need to apply the margin rates set forth in (ii) above.

- - - - - - - - - - - - - - - - - - - -

(g) For all other securities -- 100% of fair value.

 

FORM 31-103F2 SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE

(sections 8.18 [international dealer] and 8.26 [international adviser])

1. Name of person or company ("International Firm"):

2. If the International Firm was previously assigned an NRD number as a registered firm or an unregistered exempt international firm, provide the NRD number of the firm.

3. Jurisdiction of incorporation of the International Firm:

4. Head office address of the International Firm:

5. The name, e-mail address, phone number and fax number of the International Firm's chief compliance officer.

Name:

E-mail address:

Phone:

Fax:

6. Section of National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations the International Firm is relying on:

[ ] Section 8.18 [international dealer]

[ ] Section 8.26 [international adviser]

[ ] Other

7. Name of agent for service of process (the "Agent for Service"):

8. Address for service of process on the Agent for Service:

9. The International Firm designates and appoints the Agent for Service at the address stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal or other proceeding (a "Proceeding") arising out of or relating to or concerning the International Firm's activities in the local jurisdiction and irrevocably waives any right to raise as a defence in any such proceeding any alleged lack of jurisdiction to bring such Proceeding.

10. The International Firm irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of the local jurisdiction in any Proceeding arising out of or related to or concerning the International Firm's activities in the local jurisdiction.

11. Until 6 years after the International Firm ceases to rely on section 8.18 [international dealer] or section 8.26 [international adviser], the International Firm must submit to the securities regulatory authority

a. a new Submission to Jurisdiction and Appointment of Agent for Service in this form no later than the 30th day before the date this Submission to Jurisdiction and Appointment of Agent for Service is terminated; and

b. an amended Submission to Jurisdiction and Appointment of Agent for Service no later than the 30th day before any change in the name or above address of the Agent for Service.

12. This Submission to Jurisdiction and Appointment of Agent for Service is governed by and construed in accordance with the laws of the local jurisdiction.

Dated: ____________________

____________________

(Signature of the International Firm or authorized signatory)

____________________

(Name and Title of authorized signatory)

Acceptance

The undersigned accepts the appointment as Agent for Service of (Insert name of International Firm) under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service.

Dated: ____________________

____________________

(Signature of Agent for Service or authorized signatory)

____________________

(Name and Title of authorized signatory)

 

FORM 31-103F3 USE OF MOBILITY EXEMPTION

(section 2.2 [client mobility exemption -- individuals])

This is to notify the securities regulatory authority that the individual named in paragraph 1 is relying on the exemption in section 2.2 [client mobility exemption - individuals] of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

1. Individual information

Name of individual:

____________________

NRD number of individual: ____________________

The individual is relying on the client mobility exemption in each of the following jurisdictions of Canada:

____________________

____________________

____________________

2. Firm information

Name of the individual's sponsoring firm:

____________________

NRD number of firm: ____________________

Dated: ____________________

____________________

(Signature of an authorized signatory of the individual's sponsoring firm)

____________________

(Name and title of authorized signatory)

 

APPENDIX A -- BONDING AND INSURANCE CLAUSES

(section 12.3 [insurance - dealer], section 12.4 [insurance - adviser]

and section 12.5 [insurance - investment fund manager])

Clause

Name of Clause

Details

 

A

Fidelity

This clause insures against any loss through dishonest or fraudulent act of employees.

 

B

On Premises

This clause insures against any loss of money and securities or other property through robbery, burglary, theft, hold-up, or other fraudulent means, mysterious disappearance, damage or destruction while within any of the insured's offices, the offices of any banking institution or clearing house or within any recognized place of safe-deposit.

 

C

In Transit

This clause insures against any loss of money and securities or other property through robbery, burglary, theft, hold-up, misplacement, mysterious disappearance, damage or destruction, while in transit in the custody of any employee or any person acting as messenger except while in the mail or with a carrier for hire other than an armoured motor vehicle company.

 

D

Forgery or Alterations

This clause insures against any loss through forgery or alteration of any cheques, drafts, promissory notes or other written orders or directions to pay sums in money, excluding securities.

 

E

Securities

This clause insures against any loss through having purchased or acquired, sold or delivered, or extended any credit or acted upon securities or other written instruments which prove to have been forged, counterfeited, raised or altered, or lost or stolen, or through having guaranteed in writing or witnessed any signatures upon any transfers, assignments or other documents or written instruments.

 

APPENDIX B -- SUBORDINATION AGREEMENT

(Line 5 of Form 31-103F1 Calculation of excess working capital)

SUBORDINATION AGREEMENT

THIS AGREEMENT is made as of the _____ day of __________, 20___

BETWEEN:

[insert name]

(the "Lender")

AND

[insert name]

(the "Registered Firm", which term shall include all successors and assigns of the Registered Firm)

(collectively, the "Parties")

This Agreement is entered into by the Parties under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103") in connection with a loan made on the _____day of __________, 20___ by the Lender to the Registered Firm in the amount of $ ____________________ (the "Loan") for the purpose of allowing the Registered Firm to carry on its business.

For good and valuable consideration, the Parties agree as follows:

1. Subordination

The repayment of the loan and all amounts owed thereunder are subordinate to the claims of the other creditors of the Registered Firm.

2. Dissolution, winding-up, liquidation, insolvency or bankruptcy of the Registered Firm

In the event of the dissolution, winding-up, liquidation, insolvency or bankruptcy of the Registered Firm:

(a) the creditors of the Registered Firm shall be paid their existing claims in full in priority to the claims of the Lender;

(b) the Lender shall not be entitled to make any claim upon any property belonging or having belonged to the Registered Firm, including asserting the right to receive any payment in respect to the Loan before the existing claims of the other creditors of the Registered Firm have been settled.

3. Terms and conditions of the Loan

During the term of this Agreement:

(a) interest can be paid at the agreed upon rate and time, provided that the payment of such interest does not result in a capital deficiency under NI 31-103;

(b) any loan or advance or posting of security for a loan or advance by the Registered Firm to the Lender, shall be deemed to be a payment on account of the Loan.

4. Notice to the Securities Regulatory Authority

The Registered Firm must notify the Securities Regulatory Authority 10 days before the full or partial repayment of the loan. Further documentation may be requested by the Securities Regulatory Authority after receiving the notice from the Registered Firm.

5. Termination of this Agreement

This Agreement may only be terminated by the Lender once the notice required pursuant to Section 4 of this Agreement is received by the Securities Regulatory Authority.

The Parties have executed and delivered this Agreement as of the date set out above.

[Registered Firm]

____________________

Authorized signatory

 

____________________

Authorized signatory

[Lender]

____________________

Authorized signatory

 

____________________

Authorized signatory

 

APPENDIX C -- NEW CATEGORY NAMES -- INDIVIDUALS

(Section 16.1 [change of registration categories - individuals])

Column 1

Column 2

Column 3

[dealing representative]

[advising representative]

[associate advising representative]

 

Alberta

Officer (Trading)

Officer (Advising)

Junior Officer (Advising)

Salesperson

Advising Employee

Partner (Trading)

Partner (Trading)

 

British Columbia

Salesperson

Advising Employee

--

Trading Partner

Advising Partner

Trading Director

Advising Director

Trading Officer

Advising Officer

 

Manitoba

Salesperson

Advising Employee

Associate Advising Officer

Branch Manager

Advising Officer

Associate Advising Director

Trading Partner

Advising Director

Associate Advising Partner

Trading Director

Advising Partner

Associate Advising Employee

Trading Officer

 

New Brunswick

Salesperson

Representative (advising)

Associate officer (advising),

Officer (trading)

Officer (advising)

Associate partner (advising),

Partner (trading)

Partner (advising)

Associate representative (advising)

Sole proprietor (advising)

 

Newfoundland and Labrador

Sales Person

Officer (Advising)

--

Officer (Trading)

Partner (Advising)

Partner (Trading)

 

Nova Scotia

Salesperson

Officer-advising

--

Officer -- trading

Officer -- counseling

Partner- trading

Partner- advising

Director -- trading

Partner- counseling

Director- advising

Director- counseling

 

Ontario

Salesperson

Advising Representative

--

Officer (Trading)

Officer (Advising)

Partner (Trading)

Partner (Advising)

Sole Proprietor

Sole Proprietor

 

Prince Edward Island

Salesperson

Counselling Officer (Officer)

--

Officer (Trading)

Counselling Officer (Partner)

Partner (Trading)

Counselling Officer (Other)

 

Québec

Representative,

Representative (Portfolio

--

Representative - Group

Manager)

Savings Plan (salesperson),

Representative (Advising),

Representative - Scholarship

Representative -- Options,

Plan (salesperson)

Representative - Futures

 

Saskatchewan

Officer (Trading)

Officer (Advising)

--

Partner (Trading)

Partner (Advising)

Salesperson

Employee (Advising)

 

Northwest Territories

Salesperson

Representative (Advising)

--

Officer (Trading)

Officer (Advising)

Partner (Trading)

Partner (Advising)

 

Nunavut

Salesperson

Representative (Advising)

--

Officer (Trading)

Officer (Advising)

Partner (Trading)

Partner (Advising)

 

Yukon

Salesperson

Representative (Advising)

--

Officer (Trading)

Officer (Trading)

Partner (Trading)

Partner (Advising)

Sole proprietor (Trading)

 

APPENDIX D -- NEW CATEGORY NAMES -- FIRMS

(Section 16.2 [change of registration categories - firms])

Column 1

Column 2

Column 3

Column 4

Column 5

Column 6

[investment dealer]

[mutual fund dealer]

[scholarship plan dealer]

[restricted dealer]

[portfolio manager]

[restricted portfolio manager]

 

Alberta

investment dealer

mutual fund dealer

scholarship plan dealer

dealer,

investment counsel and/or portfolio manager

portfolio manager/investment counsel (exchange contracts)

 

dealer (exchange contracts),

 

dealer (restricted)

 

British Columbia

investment dealer

mutual fund dealer

scholarship plan dealer

exchange contracts dealer,

investment counsel or portfolio manager

--

special limited dealer

 

Manitoba

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

New Brunswick

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel and portfolio manager

--

 

Newfoundland and Labrador

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Nova Scotia

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Ontario

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Prince Edward Island

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Québec

unrestricted practice dealer,

firm in group savings-plan brokerage

scholarship plan dealer

Québec Business investment company (QBIC) Debt securities dealer restricted practice Dealer firm in investment contract brokerage unrestricted practice dealer (Nasdaq)

unrestricted practice adviser,

restricted practice advisor

 

unrestricted practice dealer (introducing broker),

unrestricted practice adviser (International Financial Centre)

 

unrestricted practice dealer (International Financial Centre),

 

discount broker

 

Saskatchewan

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Northwest Territories

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Nunavut

investment dealer

mutual fund dealer

scholarship plan dealer

--

investment counsel or portfolio manager

--

 

Yukon

broker

broker

scholarship plan dealer

--

broker

--

 

APPENDIX E -- NON-HARMONIZED CAPITAL REQUIREMENTS

(Section 12.1 [capital requirements])

Alberta

Sections 23 and 24 of the Alberta Securities Commission Rules (General)

 

British Columbia

Sections 19, 20, 24 and 25 of the Securities Rules.

 

Sections 2.1(i), 2.3(i), 9.4, 13.3, 15.4 and 16.3 of BC Policy 31-601 Registration Requirements.

 

Manitoba

None in the Act or Regulations - Handled through terms and conditions

 

New Brunswick

Sections 7.1, 7.2, 7.3, 7.4 and 7.5 of New Brunswick Local Rule 31-501 Registration Requirements, as those sections read immediately before revocation

 

Newfoundland and Labrador

Sections 84, 85, 95, 96, 97 and 99 of the Securities Regulations under the Securities Act (O.C. 96-286)

 

Nova Scotia

Section 23 of the General Securities Rules, as the section read immediately before revocation

 

Ontario

Sections 96, 97, 107, 111 of the Ontario Regulation 1015 made under the Securities Act, as those sections read immediately before revocation

 

Prince Edward Island

Section 34 of the former Securities Act Regulations and incorporated by reference by Local Rule 31-501 (Transitional Registration Requirements)

 

Québec

Sections 207 to 209, 211 and 212 of the Québec Securities Regulation or sections 8 to 11 of the Regulation respecting the trust accounts of financial resources of securities firms as those sections read immediately before repeal

 

Saskatchewan

Sections 19 and 24 of The Securities Regulations (Saskatchewan) as those sections read immediately before revocation

 

Northwest Territories

None in the Act, Regulations, or local rules - Handled through terms and conditions

 

Nunavut

None in the Act, Regulations, or local rules - Handled through terms and conditions

 

Yukon

Local Rule 31-501 Registration Requirements

 

APPENDIX F -- NON-HARMONIZED INSURANCE REQUIREMENTS

(Section 16.13 [insurance requirements])

Alberta

Sections 25 and 26 of the Alberta Securities Commission Rules (General)

 

British Columbia

Sections 21 and 22 of the Securities Rules

 

Sections 2.1(h), 2.3(h) and 2.5(h) of BC Policy 31-601 Registration Requirements

 

Manitoba

Subsection 7(4) of the Securities Act - general requirement at Director's discretion

 

New Brunswick

Sections 8.1, 8.2, 8.3 and 8.7 of New Brunswick Local Rule 31-501 Registration Requirements, as those sections read immediately before revocation

 

Newfoundland and Labrador

Sections 95, 96, and 97 of the Securities Regulations under the Securities Act (O.C. 96-286)

 

Nova Scotia

Section 24 of the General Securities Rules, as the section read immediately before revocation

 

Ontario

Sections 96, 97, 108, 109 of the Ontario Regulation 1015 made under the Securities Act, as those sections read immediately before revocation

 

Prince Edward Island

Section 35 of the former Securities Act Regulations and incorporated by reference by Local Rule 31-501 (Transitional Registration Requirements)

 

Québec

Section 213 and 214 of the Québec Securities Regulation as those sections read immediately before repeal

 

Saskatchewan

Section 33 of The Securities Act, 1988 (Saskatchewan), as that section read immediately before repeal

 

Sections 20, 21 and 22 of The Securities Regulations (Saskatchewan), as those sections read immediately before revocation

 

Northwest Territories

Section 4 of Local Rule 31-501 Registration

 

Nunavut

None in the Act, Regulations, or local rules - Handled through terms and conditions

 

Yukon

Local Rule 31-501 Registration Requirements

 

Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations

COMPANION POLICY 31-103 CP

REGISTRATION REQUIREMENTS, EXEMPTIONS

AND ONGOING REGISTRANT OBLIGATIONS

Part 1 Definitions and fundamental concepts

1.1 Introduction

Purpose of this Companion Policy

This Companion Policy sets out how the Canadian Securities Administrators (the CSA or we) interpret or apply the provisions of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and related securities legislation.

Numbering system

Except for Part 1, the numbering of Parts, Divisions and sections in this Companion Policy correspond to the numbering in NI 31-103. Any general guidance for a Part or a Division appears immediately after the Part or Division name. Any specific guidance on sections in NI 31-103 follows any general guidance. If there is no guidance for a Part, Division or section, the numbering in this Companion Policy will skip to the next provision that does have guidance.

All references in this Companion Policy to sections, Parts and Divisions are to NI 31-103, unless otherwise noted.

Additional requirements applicable to registrants

For additional requirements that may apply to them, registrants should refer to:

• National Instrument 31-102 National Registration Database (NI 31-102) and the Companion Policy to NI 31-102

• National Instrument 33-109 Registration Information (NI 33-109) and the Companion Policy to NI 33-109

• National Policy 11-204 Process for Registration in Multiple Jurisdictions (NP 11-204), and

• securities and derivatives legislation in their jurisdiction

Registrants that are members of a self-regulatory organization (SRO) must also comply with their SRO's requirements.

Disclosure and notices

Delivering disclosure and notices to the principal regulator

Under section 1.3, registrants must deliver all disclosure and notices required under NI 31-103 to the registrant's principal regulator. This does not apply to notices under sections:

• 8.18 International dealer

• 8.26 International adviser

• 11.9 Registrant acquiring a registered firm's securities or assets, and

• 11.10 Registered firm whose securities are acquired

Registrants must deliver these notices to the regulator in each jurisdiction where they are registered or relying on an exemption from registration.

Electronic delivery of documents

These documents may be delivered electronically. Registrants should refer to National Policy 11-201 Delivery of Documents by Electronic Means and, in Québec, Notice 11-201 Delivery of Documents by Electronic Means.

See Appendix A for contact information for each regulator.

Clear and meaningful disclosure to clients

We expect registrants to present disclosure information to clients in a clear and meaningful manner in order to ensure clients understand the information presented. Registrants should ensure that investors can readily understand the information. These requirements are consistent with the obligation to deal fairly, honestly and in good faith with clients.

1.2 Definitions

Unless defined in NI 31-103, terms used in NI 31-103 and in this Companion Policy have the meaning given to them in the securities legislation of each jurisdiction or in National Instrument 14-101 Definitions. See Appendix B for a list of some terms that are not defined in NI 31-103 or this Companion Policy but are defined in other securities legislation.

In this Companion Policy "regulator" means the regulator or securities regulatory authority in a jurisdiction.

Permitted client

The following discussion provides guidance on the term "permitted client", which is defined in section 1.1.

"Permitted client" is used in the following sections:

• 8.18 International dealer

• 8.26 International adviser

• 13.2 Know your client

• 13.3 Suitability

• 13.13 Disclosure when recommending the use of borrowed money

• 14.2 Relationship disclosure information, and

• 14.4 When the firm has a relationship with a financial institution

Exemptions from registration when dealing with permitted clients

NI 31-103 exempts international dealers and international advisers from the registration requirement if they deal with certain permitted clients and meet certain other conditions.

Exemptions from other requirements when dealing with permitted clients

Under section 13.3, permitted clients may waive their right to have a registrant determine that a trade is suitable. In order to rely on this exemption, the registrant must determine that a client is a permitted client at the time the client waives their right to suitability.

Under sections 13.13, 14.2 and 14.4, registrants do not have to provide certain disclosures to permitted clients. In order to rely on these exemptions, registrants must determine that a client is a permitted client at the time the client opens an account.

Determining assets

The definition of permitted client includes monetary thresholds based on the value of the client's assets. The monetary thresholds in paragraphs (o) and (q) of the definition are intended to create "bright-line" standards. Investors who do not satisfy these thresholds do not qualify as permitted clients under the applicable paragraph.

Paragraph (o) of the definition

Paragraph (o) refers to an individual who beneficially owns financial assets with an aggregate realizable value that exceeds $5 million, before taxes but net of any related liabilities.

In general, determining whether financial assets are beneficially owned by an individual should be straightforward. However, this determination may be more difficult if financial assets are held in a trust or in other types of investment vehicles for the benefit of an individual.

Factors indicating beneficial ownership of financial assets include:

• possession of evidence of ownership of the financial asset

• entitlement to receive any income generated by the financial asset

• risk of loss of the value of the financial asset, and

• the ability to dispose of the financial asset or otherwise deal with it as the individual sees fit

For example, securities held in a self-directed RRSP for the sole benefit of an individual are beneficially owned by that individual. Securities held in a group RRSP are not beneficially owned if the individual cannot acquire and deal with the securities directly.

"Financial assets" is defined in section 1.1 of National Instrument 45-106 Prospectus and Registration Exemptions (NI 45-106).

Realizable value is typically the amount that would be received by selling an asset.

Paragraph (q) of the definition

Paragraph (q) refers to a person or company that has net assets of at least $25 million, as shown on its last financial statements. "Net assets" under this paragraph is total assets minus total liabilities.

1.3 Fundamental concepts

This section describes the fundamental concepts that form the basis of the registration regime:

• requirement to register

• business trigger for trading and advising, and

• fitness for registration

A registered firm is responsible for the conduct of the individuals whose registration it sponsors. A registered firm

• must undertake due diligence before sponsoring an individual to be registered to act on its behalf (see further guidance in Part 4 Due diligence by firms of the Companion Policy to NI 33-109)

• has an ongoing obligation to monitor and supervise its registered individuals in an effective manner (see further guidance in section 11.1 of this Companion Policy)

Failure of a registered firm to take reasonable steps to discharge these responsibilities may be relevant to the firm's own continued fitness for registration.

Requirement to register

The requirement to register is found in securities legislation. Firms must register if they are:

• in the business of trading

• in the business of advising

• holding themselves out as being in the business of trading or advising

• acting as an underwriter, or

• acting as an investment fund manager

Individuals must register if they trade, underwrite or advise on behalf of a registered dealer or adviser, or act as the ultimate designated person (UDP) or chief compliance officer (CCO) of a registered firm. Except for the UDP and the CCO, individuals who act on behalf of a registered investment fund manager do not have to register.

However, all permitted individuals of any registrant must file Form 33-109F4 Registration of Individuals and Review of Permitted Individuals (Form 33-109F4).

There is no renewal requirement for registration, but fees must be paid every year to maintain registration.

Multiple categories

Registration in more than one category may be necessary. For example, an adviser that also manages an investment fund may have to register as a portfolio manager and an investment fund manager. An adviser that manages a portfolio and distributes units of an investment fund may have to register as a portfolio manager and as a dealer.

Registration exemptions

NI 31-103 provides exemptions from the registration requirement. There may be additional exemptions in securities legislation. Some exemptions do not need to be applied for if the conditions of the exemption are met. In other cases, on receipt of an application, the regulator has discretion to grant exemptions for specified dealers, advisers or investment fund managers, or activities carried out by them if registration is required but specific circumstances indicate that it is not otherwise necessary for investor protection or market integrity.

Business trigger for trading and advising

We refer to trading or advising in securities for a business purpose as the "business trigger" for registration.

We look at the type of activity and whether it is carried out for a business purpose to determine if an individual or firm must register. We consider the factors set out below, among others, to determine if the activity is for a business purpose. For the most part, these factors are from case law and regulatory decisions that have interpreted the business purpose test for securities matters.

Factors in determining business purpose

This section describes factors that we consider relevant in determining whether an individual or firm is trading or advising in securities for a business purpose and, therefore, subject to the dealer or adviser registration requirement.

This is not a complete list. We do not automatically assume that any one of these factors on its own will determine whether an individual or firm is in the business of trading or advising in securities.

(a) Engaging in activities similar to a registrant

We usually consider an individual or firm engaging in activities similar to those of a registrant to be trading or advising for a business purpose. Examples include promoting securities or stating in any way that the individual or firm will buy or sell securities. If an individual or firm sets up a business to carry out any of these activities, we may consider them to be trading or advising for a business purpose.

(b) Intermediating trades or acting as a market maker

In general, we consider intermediating a trade between a seller and a buyer of securities to be trading for a business purpose. This typically takes the form of the business commonly referred to as a broker. Making a market in securities is also generally considered to be trading for a business purpose.

(c) Directly or indirectly carrying on the activity with repetition, regularity or continuity

Frequent or regular transactions are a common indicator that an individual or firm may be engaged in trading or advising for a business purpose. The activity does not have to be their sole or even primary endeavour for them to be in the business.

We consider regularly trading or advising in any way that produces, or is intended to produce, profits to be for a business purpose. We also consider any other sources of income and how much time an individual or firm spends on all activities associated with the trading or advising.

(d) Being, or expecting to be, remunerated or compensated

Receiving, or expecting to receive, any form of compensation for carrying on the activity, including whether the compensation is transaction or value based, indicates a business purpose. It does not matter if the individual or firm actually receives compensation or in what form. Having the capacity or the ability to carry on the activity to produce profit is also a relevant factor.

(e) Directly or indirectly soliciting

Contacting anyone to solicit securities transactions or to offer advice may reflect a business purpose. Solicitation includes contacting someone by any means, including advertising that proposes buying or selling securities or participating in a securities transaction, or that offers services or advice for these purposes.

Business trigger examples

This section explains how the business trigger might apply to some common situations.

(a) Securities issuers

A securities issuer is an entity that issues or trades in its own securities. In general, securities issuers with an active non-securities business do not have to register as a dealer if they:

• do not hold themselves out as being in the business of trading in securities

• trade in securities infrequently

• are not, or do not expect to be, compensated for trading in securities

• do not act as intermediaries, and

• do not produce, or intend to produce, a profit from trading in securities

However, securities issuers may have to register as a dealer if they:

• frequently trade in securities

• employ or otherwise contract individuals to perform activities on their behalf that are similar to those performed by a registrant (other than underwriting in the normal course of a distribution or trading for their own account)

• solicit investors actively, or

• act as an intermediary by investing client money in securities

For example, an investment fund manager that carries out the activities described above may have to register as a dealer.

Securities issuers that are in the business of trading should consider whether they qualify for the exemption from the registration requirement for trades through a registered dealer in section 8.5.

In most cases, securities issuers are subject to the prospectus requirements in securities legislation. Regulators have the discretionary authority to require an underwriter for a prospectus distribution.

(b) Venture capital and private equity

This guidance does not apply to labour sponsored or venture capital funds as defined in National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106).

Venture capital and private equity investing are distinguished from other forms of investing by the role played by venture capital and private equity management companies (collectively, VCs). This type of investing includes a range of activities that may require registration.

VCs typically raise money under one of the prospectus exemptions in NI 45-106, including for trades to "accredited investors". The investors typically agree that their money will remain invested for a period of time. The VC uses this money to invest in securities of companies that are not publicly traded. The VC usually becomes actively involved in the management of the company, often over several years.

Examples of active management in a company include the VC having:

• representation on the board of directors

• direct involvement in the appointment of managers

• a say in material management decisions

The VC looks to realize on the investment either through a public offering of the company's securities, or a sale of the business. At this point, the investors' money can be returned to them, along with any profit.

Investors rely on the VC's expertise in selecting and managing the companies it invests in. In return, the VC receives a management fee or "carried interest" in the profits generated from these investments. They do not receive compensation for raising capital or trading in securities.

Applying the business trigger factors to the VC activities as described above, there would be no requirement for the VC to register as:

• a portfolio manager, if the advice provided in connection with the purchase and sale of companies is incidental to the VC's active management of these companies, or

• a dealer, if both the raising of money from investors and the investing of that money in companies are occasional and uncompensated activities

If the VC is actively involved in the management of the companies it invests in, the investment portfolio would generally not be considered an investment fund. As a result, the VC would not need to register as an investment fund manager.

The business trigger factors and investment fund manager analysis may apply differently if the VC engages in activities other than those described above.

(c) One-time activities

In general, we do not require registration for one-time trading or advising activities. This includes trading or advising that:

• is carried out by an individual or firm acting as a trustee, executor, administrator, personal or other legal representative, or

• relates to the sale of a business

(d) Incidental activities

If trading or advising activity is incidental to a firm's primary business, we may not consider it to be for a business purpose.

For example, merger and acquisition specialists that advise the parties to a transaction between companies are not normally required to register as dealers or advisers in connection with that activity, even though the transaction may result in trades in securities and they will be compensated for the advice. If the transaction results in trades in the securities of the company to an acquirer, this is considered incidental to the acquisition transaction. However, if the merger and acquisition specialists also engage in capital raising from prospective investors (including private placements), they will need to consider whether such activity would be in the business of trading and require registration.

Another example is professionals, such as lawyers, accountants, engineers, geologists and teachers, who may provide advice on securities in the normal course of their professional activities. We do not consider them to be advising on securities for a business purpose. For the most part, any advice on securities will be incidental to their professional activities. This is because they:

• do not regularly advise on securities

• are not compensated separately for advising on securities

• do not solicit clients on the basis of their securities advice, and

• do not hold themselves out as being in the business of advising on securities

Registration trigger for investment fund managers

Investment fund managers are subject to a registration trigger. This means that if a firm carries on the activities of an investment fund manager, it must register. However, investment fund managers are not subject to the business trigger.

Fitness for registration

The regulator will only register an applicant if they appear to be fit for registration. Following registration, individuals and firms must maintain their fitness in order to remain registered. If the regulator determines that a registrant has become unfit for registration, the regulator may suspend or revoke the registration. See Part 6 of this Companion Policy for guidance on suspension and revocation of individual registration. See Part 10 of this Companion Policy for guidance on suspension and revocation of firm registration.

Terms and conditions

The regulator may impose terms and conditions on a registration at the time of registration or at any time after registration. Terms and conditions imposed at the time of registration are generally permanent, for example, in the case of a restricted dealer who is limited to specific activities. Terms and conditions imposed after registration are generally temporary. For example, if a registrant does not maintain the required capital, it may have to file monthly financial statements and capital calculations until the regulator's concerns are addressed.

Opportunity to be heard

Applicants and registrants have an opportunity to be heard by the regulator before their application for registration is denied. They also have an opportunity to be heard before the regulator imposes terms and conditions on their registration if they disagree with the terms and conditions.

Assessing fitness for registration - firms

We assess whether a firm is or remains fit for registration through the information it is required to provide on registration application forms and as a registrant, and through compliance reviews. Based on this information, we consider whether the firm is able to carry out its obligations under securities legislation. For example, registered firms must be financially viable. A firm that is insolvent or has a history of bankruptcy may not be fit for registration.

In addition, when determining whether a firm whose head office is outside Canada is, and remains, fit for registration, we will consider whether the firm maintains registration or regulatory organization membership in the foreign jurisdiction that is appropriate for the securities business it carries out there.

Assessing fitness for registration -- individuals

We use three fundamental criteria to assess whether an individual is or remains fit for registration:

• proficiency

• integrity, and

• solvency

(a) Proficiency

Individual applicants must meet the applicable education, training and experience requirements prescribed by securities legislation and demonstrate knowledge of securities legislation and the securities they recommend.

Registered individuals should continually update their knowledge and training to keep pace with new securities, services and developments in the industry that are relevant to their business. See Part 3 of this Companion Policy for more specific guidance on proficiency.

(b) Integrity

Registered individuals must conduct themselves with integrity and have an honest character. The regulator will assess the integrity of individuals through the information they are required to provide on registration application forms and as registrants, and through compliance reviews. For example, applicants are required to disclose information about conflicts of interest, such as other employment or partnerships, service as a member of a board of directors, or relationships with affiliates, and about any regulatory or legal actions against them.

(c) Solvency

The regulator will assess the overall financial condition of an individual applicant or registrant. An individual that is insolvent or has a history of bankruptcy may not be fit for registration. Depending on the circumstances, the regulator may consider the individual's contingent liabilities. The regulator may take into account an individual's bankruptcy or insolvency when assessing their continuing fitness for registration.

Part 2 Categories of registration for individuals

2.1 Individual categories

Multiple individual categories

Individuals who carry on more than one activity requiring registration on behalf of a registered firm must:

• register in all applicable categories, and

• meet the proficiency requirements of each category

For example, an advising representative of a portfolio manager who is also the firm's CCO must register in the categories of advising representative and CCO. They must meet the proficiency requirements of both of these categories.

Individual registered in a firm category

An individual can be registered in both a firm and individual category. For example, a sole proprietor who is registered in the firm category of portfolio manager must also be registered in the individual category of advising representative.

2.2 Client mobility exemption -- individuals

Conditions of the exemption

The mobility exemption in section 2.2 allows registered individuals to continue dealing with and advising clients who move to another jurisdiction, without registering in that other jurisdiction. Section 8.30 Client mobility exemption -- firms contains a similar exemption for registered firms.

The exemption becomes available when the client (not the registrant) moves to another jurisdiction. An individual may deal with up to five "eligible" clients in each other jurisdiction. Each of the client, their spouse and any children are an eligible client.

An individual may only rely on the exemption if:

• they and their sponsoring firm are registered in their principal jurisdiction

• they and their sponsoring firm only act as a dealer, underwriter or adviser in the other jurisdiction as permitted under their registration in their principal jurisdiction

• they comply with Part 13Dealing with clients - individuals and firms

• they act fairly, honestly and in good faith in their dealings with the eligible client, and

• their sponsoring firm has disclosed to the eligible client that the individual and if applicable, their sponsoring firm, are exempt from registration in the other jurisdiction and are not subject to the requirements of securities legislation in that jurisdiction

As soon as possible after an individual first relies on this exemption, their sponsoring firm must complete and file Form 31-103F3 Use of mobility exemption (Form 31-103F3) with the other jurisdiction.

Limits on the number of clients

Sections 2.2 and 8.30 are independent of each other: individuals may rely on the exemption from registration in section 2.2 even though their sponsoring firm is registered in the local jurisdiction (and is not relying on the exemption from registration in section 8.30). The limits in sections 2.2 and 8.30 are per jurisdiction.

For example a firm using the exemption in section 8.30 could have 10 clients in each of several local jurisdictions where it is not registered. An individual may also use the exemption in section 2.2 to have 5 clients in each of several jurisdictions where the individual is not registered.

The individual limits are per individual. For example several individuals working for the same firm could each have 5 clients in the same local jurisdiction and each individual could still rely on the exemption in section 2.2. However, the firm may not exceed its 10 client limit if it wants to rely on the exemption in section 8.30. If the firm exceeds the 10 client limit, the firm must be registered in the local jurisdiction.

Part 3 Registration requirements -- individuals

Division 1 General proficiency requirements

Application of proficiency requirements

Part 3 sets out the initial and ongoing proficiency requirements for

• dealing representatives and chief compliance officers of mutual fund dealers, scholarship plan dealers and exempt-market dealers respectively

• advising representatives, associate advising representatives and chief compliance officers of portfolio managers

• chief compliance officers of investment fund managers

The regulator is required to determine the individual's fitness for registration and may exercise discretion in doing so.

Section 3.3 does not provide proficiency requirements for dealing representatives of investment dealers since the IIROC Rules provide those requirements for the individuals who are approved persons of IIROC member firms.

Exam based requirements

Individuals must pass exams -- not courses -- to meet the education requirements in Part 3. For example, an individual must pass the Canadian Securities Course Exam, but does not have to complete the Canadian Securities Course. Individuals are responsible for completing the necessary preparation to pass an exam and for proficiency in all areas covered by the exam.

3.3 Time limits on examination requirements

Under section 3.3, there is a time limit on the validity of exams prescribed in Part 3. Individuals must pass an exam within 36 months before they apply for registration. However, this time limit does not apply if the individual:

• was registered in an active capacity (i.e., not suspended), in the same category in a jurisdiction of Canada at any time during the 36-month period before the date of their application; or

• has gained relevant securities industry experience for a total of 12 months during the 36-month period before the date of their application: these months do not have to be consecutive, or with the same firm or organization

These time limits do not apply to the CFA Charter or the CIM designation, since we do not expect the holders of these designations to have to retake the courses forming part of the requirements applicable to these designations. However, if the individual no longer has the right to use the CFA Charter or the CIM designation, by reason of revocation of the designation or otherwise, we may consider the reasons for such a revocation to be relevant in determining an individual's fitness for registration. Registered individuals are required to notify the regulator of any change in the status of the CFA Charter or the CIM designation within 10 days of the change, by submitting Form 33-109F5 Change of Registration Information in accordance with National Instrument 31-102 National Registration Database.

When assessing an individual's fitness for registration, the regulator may consider

• the date on which the relevant examination was passed, and

• the length of time between any suspension and reinstatement of registration during the 36 month period

See Part 6 of this Companion Policy for guidance on the meaning of "suspension" and "reinstatement".

Relevant securities industry experience

The securities industry experience under subsection 3.3(2)(b) should be relevant to the category applied for. It may include experience acquired:

• during employment at a registered dealer, a registered adviser or an investment fund manager

• in related investment fields, such as investment banking, securities trading on behalf of a financial institution, securities research, portfolio management, investment advisory services or supervision of those activities

• in legal, accounting or consulting practices related to the securities industry

• in other professional service fields that relate to the securities industry, or

• in a securities-related business in a foreign jurisdiction

Division 2 Education and experience requirements

See Appendix C for a chart that sets out the proficiency requirements for each individual category of registration.

Granting exemptions

The regulator may grant an exemption from any of the education and experience requirements in Division 2 if it is satisfied that an individual has qualifications or relevant experience that is equivalent to, or more appropriate in the circumstances than, the prescribed requirements.

Proficiency for representatives of restricted dealers and restricted portfolio managers

The regulator will decide on a case-by-case basis what education and experience are required for registration as:

• a dealing representative or CCO of a restricted dealer, and

• an advising representative or CCO of a restricted portfolio manager

The regulator will determine these requirements when it assesses the individual's fitness for registration.

3.4 Proficiency -- initial and ongoing

Proficiency principle

Under section 3.4, registered individuals must not perform an activity that requires registration unless they have the education, training and experience that a reasonable person would consider necessary to perform the activity competently, including understanding the structure, features and risks of each security they recommend to a client (also referred to as know-your-product or KYP).

The requirement to understand the structure, features and risks of each security recommended to a client is a proficiency requirement. This requirement is in addition to the suitability obligation in section 13.3 and applies even where there is an exemption from the suitability obligation such as, for example, the exemption in subsection 13.3(4) in respect of permitted clients.

CCOs must also not perform an activity that requires registration unless they have the education, training and experience that a reasonable person would consider necessary to perform the activity competently.

Responsibility of the firm

The responsibility of registered firms to oversee the compliance of registered individuals acting on their behalf extends to ensuring that they are proficient at all times. A registered firm must not permit an individual they sponsor to perform an activity if the proficiency requirements are not met.

Firms should perform their own analysis of all securities they recommend to clients and provide product training to ensure their registered representatives have a sufficient understanding of the securities and their risks to meet their suitability obligations under section 13.3. Similarly, registered individuals should have a thorough understanding of a security before they recommend it to a client (also referred to as know-your-product or KYP).

3.11 Portfolio manager -- advising representative

3.12 Portfolio manager -- associate advising representative

The 12 months of relevant investment management experience referred to in section 3.11 and 24 months of relevant investment management experience referred to in section 3.12 do not have to be consecutive, or with the same firm or organization. The individual must obtain a total of this experience within the 36-month period before the date they apply for registration.

For individuals with a CFA charter, the regulator will decide on a case-by-case basis whether the experience they gained to earn the charter qualifies as relevant investment management experience.

Relevant investment management experience

Relevant investment management experience under sections 3.11 and 3.12 may vary according to the level of specialization of the individual. It may include:

• securities research and analysis experience, demonstrating an ability in, and understanding of, portfolio analysis or portfolio security selection, or

• management of investment portfolios on a discretionary basis, including investment decision making, rebalancing and evaluating performance

Advising representatives

Advising representatives may acquire relevant investment management experience during employment in a portfolio management capacity with a registered investment dealer or adviser firm.

Associate advising representatives

Relevant investment management experience for associate advising representatives may include working at:

• an unregistered portfolio manager of a Canadian financial institution

• an adviser that is registered in another jurisdiction of Canada, or

• an adviser in a foreign jurisdiction

Division 3 Membership in a self-regulatory organization

3.16 Exemptions from certain requirements for SRO approved persons

Section 3.16 exempts registered individuals who are dealing representatives of IIROC or MFDA members from the requirements in NI 31-103 for suitability and disclosure when recommending the use of borrowed money. This is because IIROC and the MFDA have their own rules for these matters.

In Québec, these requirements do not apply to dealing representatives of a mutual fund dealer to the extent that equivalent requirements are applicable to those dealing representatives under regulations in Québec.

This section also exempts registered individuals who are dealing representatives of IIROC from the know your client obligations in section 13.2.

Part 4 Restrictions on registered individuals

4.1 Restrictions on acting for another registered firm

We will consider exemption applications on a case by case basis. When reviewing a registered firm's application for relief from this restriction, we will consider if:

• there are valid business reasons for the individual to be registered with both firms

• the individual will have sufficient time to adequately serve both firms

• the applicant's sponsoring firms have demonstrated that they have policies and procedures addressing any conflicts of interest that may arise as a result of the dual registration, and

• the sponsoring firms will be able to deal with these conflicts, including supervising how the individual will deal with these conflicts

In the case of 4.1(1)(b), namely a dealing, advising or associate advising representative acting for another registered firm, affiliation of the firms may be one of the factors that we would consider in respect of an exemption application.

We note that the prohibitions in section 4.1 are in addition to the conflicts of interest provisions set out in section 13.4 [Identifying and responding to conflicts of interest]. See section 13.4 for further guidance on individuals who serve on boards of directors.

4.2 Associate advising representatives -- pre-approval of advice

The associate advising representative category is primarily meant to be an apprentice category for individuals who intend to become an advising representative but who do not meet the education or experience requirements for that category when they apply for registration. It allows an individual to work at a registered adviser while completing the proficiency requirements for an advising representative. For example, a previously registered advising representative could work in an advising capacity while acquiring the relevant work experience required for an advising representative under section 3.11.

However, associate advising representatives are not required to subsequently register as a full advising representative. They can remain as an associate advising representative indefinitely. This category also accommodates, for example, individuals who provide specific advice to clients, but do not manage client portfolios without supervision.

As required by section 4.2, registered firms must designate an advising representative to approve the advice provided by an associate advising representative. The designated advising representative must approve the advice before the associate advising representative gives it to the client. The appropriate processes for approving the advice will depend on the circumstances, including the associate advising representative's level of experience.

Registered firms that have associate advising representatives must:

• document their policies and procedures for meeting the supervision and approval obligations as required under section 11.1

• implement controls as required under section 11.1

• maintain records as required under section 11.5, and

• notify the regulator of the names of the advising representative and the associate advising representative whose advice they are approving no later than the seventh day after the advising representative is designated

Part 5 Ultimate designated person and chief compliance officer

Sections 11.2 and 11.3 require registered firms to designate a UDP and a CCO. The UDP and CCO must be registered and perform the compliance functions set out in sections 5.1 and 5.2. While the UDP and CCO have specific compliance functions, they are not solely responsible for compliance - it is the responsibility of the firm as a whole.

The same person as UDP and CCO

The UDP and the CCO can be the same person if they meet the requirements for both registration categories. We prefer firms to separate these functions, but we recognize that it might not be practical for some registered firms.

UDP or CCO as advising or dealing representative

The UDP or CCO may also be registered in trading or advising categories. For example, a small registered firm might conclude that one individual can adequately function as UDP and CCO, while also carrying on advising and trading activities. We may have concerns about the ability of a UDP or CCO of a large firm to conduct these additional activities and carry out their UDP, CCO and advising responsibilities at the same time.

5.1 Responsibilities of the ultimate designated person

The UDP is responsible for promoting a culture of compliance and overseeing the effectiveness of the firm's compliance system. They do not have to be involved in the day to day management of the compliance group. There are no specific education or experience requirements for the UDP. However, they are subject to the proficiency principle in section 3.4.

5.2 Responsibilities of the chief compliance officer

The CCO is an operating officer who is responsible for the monitoring and oversight of the firm's compliance system. This includes:

• establishing or updating policies and procedures for the firm's compliance system, and

• managing the firm's compliance monitoring and reporting according to the policies and procedures

At the firm's discretion, the CCO may also have authority to take supervisory or other action to resolve compliance issues.

The CCO must meet the proficiency requirements set out in Part 3. No other compliance staff have to be registered unless they are also advising or trading. The CCO may set the knowledge and skills necessary or desirable for individuals who report to them.

If a firm is registered in multiple categories, the CCO must meet the most stringent of the proficiency requirements of the firm's categories of registration.

Firms must designate one CCO. However, in large firms, the scale and kind of activities carried out by different operating divisions may warrant the designation of more than one CCO. We will consider applications, on a case-by-case basis, for different individuals to act as the CCO of a firm's operating divisions.

We will not usually register the same person as CCO of more than one firm unless the firms are affiliated, and the scale and kind of activities carried out make it reasonable for the same person to act as CCO of more than one firm. We will consider applications, on a case-by-case basis, for the CCO of one registered firm to act as the CCO of another registered firm.

Subsection 5.2(c) requires the CCO to report to the UDP any instances of non-compliance with securities legislation that:

• create a reasonable risk of harm to a client or to the market, or

• are part of a pattern of non-compliance

The CCO should report non-compliance to the UDP even if it has been corrected.

Subsection 5.2(d) requires the CCO to submit an annual report to the board of directors.

Part 6 Suspension and revocation of registration -- individuals

The requirements for surrendering registration and additional requirements for suspending and revoking registration are found in the securities legislation of each jurisdiction. The guidance for Part 6 relates to requirements under both securities legislation and NI 31-103.

There is no renewal requirement for registration. A registered individual may carry on the activities for which they are registered until their registration is:

• suspended automatically under NI 31-103

• suspended by the regulator under certain circumstances, or

• surrendered by the individual

6.1 If individual ceases to have authority to act for firm

Under section 6.1, if a registered individual ceases to have authority to act on behalf of their sponsoring firm because their working relationship with the firm ends or changes, the individual's registration with the registered firm is suspended until reinstated or revoked under securities legislation. This applies whether the individual or the firm ends the relationship.

If a registered firm terminates its working relationship with a registered individual for any reason, the firm must complete and file a notice of termination on Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals (Form 33-109F1) no later than ten days after the effective date of the individual's termination. This includes when an individual resigns, is dismissed or retires.

The firm must file additional information about the individual's termination prescribed in Part 5 of Form 33-109F1 (except where the individual is deceased), no later than 30 days after the date of termination. The regulator uses this information to determine if there are any concerns about the individual's conduct that may be relevant to their ongoing fitness for registration. Under NI 33-109, the firm must provide this information to the individual on request.

Suspension

An individual whose registration is suspended must not carry on the activity they are registered for. The individual otherwise remains a registrant and is subject to the jurisdiction of the regulator. A suspension remains in effect until the regulator reinstates or revokes the individual's registration.

If an individual who is registered in more than one category is suspended in one of the categories, the regulator will consider whether to suspend the individual's registration in other categories or to impose terms and conditions, subject to an opportunity to be heard.

Automatic suspension

An individual's registration will automatically be suspended if:

• they cease to have a working relationship with their sponsoring firm

• the registration of their sponsoring firm is suspended or revoked, or

• they cease to be an approved person of an SRO

An individual must have a sponsoring firm to be registered. If an individual leaves their sponsoring firm for any reason, their registration is automatically suspended. Automatic suspension is effective on the day that an individual no longer has authority to act on behalf of their sponsoring firm.

Individuals do not have an opportunity to be heard by the regulator in the case of any automatic suspension.

Suspension in the public interest

An individual's registration may be suspended if the regulator exercises its power under securities legislation and determines that it is no longer in the public interest for the individual to be registered. The regulator may do this if it has serious concerns about the ongoing fitness of the individual. For example, this may be the case if an individual is charged with a crime, in particular fraud or theft.

Reinstatement

"Reinstatement" means that a suspension on a registration has been lifted. Once reinstated, an individual may resume carrying on the activity they are registered for. If a suspended individual joins a new sponsoring firm, they will have to apply for reinstatement under the process set out in NI 33-109. In certain cases, the reinstatement or transfer to the new firm will be automatic.

Automatic transfers

Subject to certain conditions set out in NI 33-109, an individual's registration may be automatically reinstated if they:

• transfer directly from one sponsoring firm to another registered firm in the same jurisdiction

• join the new sponsoring firm within 90 days of leaving their former sponsoring firm

• seek registration in the same category as the one previously held, and

• complete and file Form 33-109F7 Reinstatement of Registered Individuals and Permitted Individuals (Form 33-109F7)

This allows individuals to engage in activities requiring registration from their first day with the new sponsoring firm.

Individuals are not eligible for an automatic reinstatement if they:

• have new information to disclose regarding regulatory, criminal, civil or financial matters as described in Item 9 of Form 33-109F7, or

• as a result of allegations of criminal activity, breach of securities legislation or breach of SRO rules:

• were dismissed by their former sponsoring firm, or

• were asked by their former sponsoring firm to resign

In these cases, the individual must apply to have their registration reinstated under NI 33-109 using Form 33-109F4.

6.2 If IIROC approval is revoked or suspended

6.3 If MFDA approval is revoked or suspended

Registered individuals acting on behalf of member firms of an SRO are required to be an approved person of the SRO.

If an SRO suspends or revokes its approval of an individual, the individual's registration in the category requiring SRO approval will be automatically suspended. This automatic suspension of individuals does not apply to mutual fund dealers registered only in Québec.

If an SRO suspends an individual for reasons that do not involve significant regulatory concerns and subsequently reinstates the individual's approval, the individual's registration will usually be reinstated by the regulator as soon as possible.

Revocation

6.6 Revocation of a suspended registration - individual

If an individual's registration has been suspended under Part 6 but not reinstated, it will be automatically revoked on the second anniversary of the suspension.

"Revocation" means that the regulator has terminated the individual's registration. An individual whose registration has been revoked must submit a new application if they want to be registered again.

Surrender or termination of registration

If an individual wants to terminate their registration in one or more of the non-principal jurisdictions where the individual is registered, the individual may apply to surrender their registration at any time by completing Form 33-109F2 Change or Surrender of Individual Categories (Form 33-109F2) and having their sponsoring firm file it.

If an individual wants to terminate their registration in their principal jurisdiction, Form 33-109F1 must be filed by the individual's sponsoring firm. Once Form 33-109F1 is filed, the individual's termination of registration will be reflected in all jurisdictions.

Part 7 Categories of registration for firms

The categories of registration for firms have two main purposes:

• to specify the type of business that the firm may conduct, and

• to provide a framework for the requirements the registrant must meet

Firms registered in more than one category

A firm may be required to register in more than one category. For example, a portfolio manager that manages an investment fund must register both as a portfolio manager and as an investment fund manager.

Individual registered in a firm category

An individual can be registered in both a firm and individual category. For example, a sole proprietor who is registered in the firm category of portfolio manager must also be registered in the individual category of advising representative.

7.1 Dealer categories

Underwriting is a subset of dealing activity for specified categories. Investment dealers may underwrite any securities. Exempt market dealers may underwrite securities in limited circumstances.

Exempt market dealer

Under subsection 7.1(2)(d), exempt market dealers may only act as a dealer in the "exempt market". The permitted activities of an exempt market dealer are determined with reference to the prospectus exemptions in NI 45-106 and include trades to "accredited investors" and purchasers of at least $150,000 of a security and trades to anyone under the offering memorandum exemption.

Exempt market dealers can sell investment funds (whether or not they are prospectus-qualified) under these exemptions without registering as a mutual fund dealer or being a member of the MFDA.

Restricted dealer

The restricted dealer category in subsection 7.1(2)(e) permits specialized dealers that may not qualify under another dealer category to carry on a limited trading business. It is intended to be used only if there is a compelling case for the proposed trading to take place outside the other registration categories.

The regulator will impose terms and conditions that restrict the dealer's activities. The CSA will co-ordinate terms and conditions for restricted dealers.

7.2 Adviser categories

The registration requirement in section 7.2 applies to advisers who give "specific advice". Advice is specific when it is tailored to the needs and circumstances of a client or potential client. For example, an adviser who recommends a security to a client is giving specific advice.

Restricted portfolio manager

The restricted portfolio manager category in subsection 7.2(2)(b) permits individuals or firms to advise in specific securities, classes of securities or securities of a class of issuers.

The regulator will impose terms and conditions on a restricted portfolio manager's registration that limit the manager's activities. For example, a restricted portfolio manager might be limited to advising in respect of a specific sector, such as securities of oil and gas issuers.

7.3 Investment fund manager category

Investment fund managers direct the business, operations or affairs of an investment fund. They organize the fund and are responsible for its management and administration. If an entity is uncertain about whether it must register as an investment fund manager, it should consider whether the fund is an "investment fund" for the purposes of securities legislation. See section 1.2 of the Companion Policy to NI 81-106 for guidance on the general nature of investment funds.

An investment fund manager may:

• advertise to the general public a fund it manages without being registered as an adviser, and

• promote the fund to registered dealers without being registered as a dealer

If an investment fund manager acts as portfolio manager for a fund it manages, it should consider whether it may have to be registered as an adviser. If it distributes units of the fund directly to investors, it should consider whether it may have to be registered as a dealer.

In most fund structures, the investment fund manager is a separate legal entity from the fund itself. However, in situations where the board of directors or the trustee(s) of an investment fund direct the business, operations or affairs of the investment fund, the fund itself may be required to register in the investment fund manager category. To address the investor protection concerns that may arise from the investment fund manager and the fund being the same legal entity, and the practical issues of applying the ongoing requirements of a registrant on the fund, terms and conditions may be imposed.

An investment fund manager may delegate or outsource certain functions to other service providers. However, the investment fund manager is responsible for these functions and must supervise the service provider. See Part 11 of this Companion Policy for more guidance on outsourcing.

Investment fund complexes or groups with more than one investment fund manager

Some investment fund complexes or groups may have more than one entity within the fund complex that can be considered as directing the business, operations or affairs of an investment fund. For example, structures where investment funds are organized as limited partnerships may have multiple entities within the fund complex that could require investment fund manager registration. Although the investment fund manager functions are often delegated to one entity within the fund complex, there may be more than one entity in the group subject to investment fund manager registration, absent an exemption from registration.

We will consider exemption applications on a case-by-case basis to allow only one investment fund manager within the fund complex to be registered. We will typically consider the following factors when reviewing such applications:

• there is a management agreement in place delegating all or substantially all of the investment fund management function from the investment fund manager seeking the relief to an affiliate (or to an entity whose mind and management is the same) that is registered as an investment fund manager

• the majority of the investment fund management functions are performed by the registered affiliate (or entity whose mind and management is the same)

• the investment fund manager seeking the relief and the registered affiliate have directors and officers in common

Part 8 Exemptions from the requirement to register

NI 31-103 provides several exemptions from the registration requirement. There may be additional exemptions in securities legislation. If a firm is exempt from registration, the individuals acting on its behalf are also exempt from registration.

Division 1 Exemptions from dealer and underwriter registration

We provide no specific guidance for the following exemptions because there is guidance on them in the Companion Policy to NI 45-106:

• 8.12 Mortgages

• 8.17 Reinvestment plan

• 8.20 Exchange contract - Alberta, British Columbia, New Brunswick and Saskatchewan

8.5 Trades through or to a registered dealer

Section 8.5 provides an exemption from the dealer registration requirement for trades made

• solely through an agent who is an appropriately registered dealer, or

• to an appropriately registered dealer that is purchasing for that dealer's account

This exemption is available in respect of a trade made by a person through a registered dealer so long as there is no intervening trading activity by that person for which that person is not appropriately registered or otherwise exempt from the dealer registration requirement. This would typically be the case where an individual trades through their account with an investment dealer or a company issues its own securities through an investment dealer.

This exemption is, however, not available where a person or company conducts trading activities for which they are not registered or exempt from registration and then directs the execution of that trade through a registered dealer. Such trading activities could involve directly contacting persons in the local jurisdiction to solicit their purchase of securities or marketing the securities in the local jurisdiction. For example:

• if an individual acts in furtherance of a sale of securities by soliciting potential purchasers of securities (sometimes referred to as a finder) and then the sale to the purchaser is executed through a registered dealer, the individual would not qualify for this exemption.

• if a person who is registered in the local jurisdiction, or operates under an exemption for their trading activities in that local jurisdiction, proposes to rely on this exemption for their trading activities in another jurisdiction of Canada, the person would need to utilize an appropriately registered dealer to solicit purchases in the other jurisdiction, since that person could not interact directly with purchasers in the other jurisdiction (without being appropriately registered or exempt from registration in that other jurisdiction).

Cross-border transactions ("jitneys")

All trading activity in reliance upon this exemption that occurs within the local jurisdiction should be done through or to a registered dealer in that jurisdiction. On that basis, the execution of a trade through or to an appropriately registered dealer by a dealer located in another jurisdiction would qualify under this exemption. However, if the dealer in the other jurisdiction engages in other trading activities in the local jurisdiction in connection with the transaction, the trade is no longer a trade made solely through or to a registered dealer and this exemption would not be available.

A trade is not considered to be solely through a registered dealer if the dealer in the other jurisdiction interacts directly with the purchaser in the local jurisdiction. For example, if a dealer in the United States that is not registered in Alberta contacts a potential purchaser in Alberta to solicit the purchase of securities, this trade does not qualify for this exemption. The dealer in the United States must instead solicit the purchase by contacting a dealer registered in Alberta, and have that dealer contact potential purchasers in Alberta.

Plan administrators

A plan administrator can rely on this exemption to place sell orders with dealers in respect of shares of issuers held by plan participants. Section 8.16 [Plan administrator] covers the activity of the plan administrator receiving sell orders from plan participants.

8.6 Investment fund trades by adviser to managed account

Registered advisers often create and use investment funds as a way to efficiently invest their clients' money. In issuing units of those funds to managed account clients, they are in the business of trading in securities. Under the exemption in section 8.6, a registered adviser does not have to register as a dealer does for a trade in a security of an investment fund if they:

• act as the fund's adviser and investment fund manager, and

• distribute units of the fund only into their clients' managed accounts

The exemption is also available to those who qualify for the international adviser exemption under section 8.26.

Subsection 8.6(2) limits the availability of this exemption to legitimate managed accounts. We do not intend for the exemption to be used to distribute the adviser's investment funds on a retail basis.

8.18 International dealer

General principle

This exemption allows international dealers to provide limited services to Canadian permitted clients,as defined in section 8.18, without having to register in Canada. International dealers that seek wider access to Canadian investors must register in an appropriate category. Both the terms Canadian permitted client and permitted client are used in this section. As mentioned above, the term Canadian permitted client is defined in section 8.18. The term permitted client is defined in section 1.1.

Notice requirement

If a firm is relying on the exemption in more than one jurisdiction, it must provide an initial notice by filing a Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service (Form 31-103F2) with the regulator in each jurisdiction where it relies on the exemption. If there is any change to the information in the firm's Form 31-103F2, it must update it by filing a replacement Form 31-103F2 with them.

So long as the firm continues to rely on the exemption, it must file an annual notice with each regulator. Subsection 8.18(5) does not prescribe a form of annual notice. An email or letter will therefore be acceptable.

In Ontario, compliance with the filing and fee payment requirements applicable to an unregistered exempt international dealer under Ontario Securities Commission Rule 13-502 Fees satisfies the annual notification requirement in subsection (5).

8.19 Self-directed registered education savings plan

We consider the creation of a self-directed registered education savings plan, as defined in section 8.19, to be a trade in a security, whether or not the assets held in the plan are securities. This is because the definition of "security" in securities legislation of most jurisdictions includes "any document constituting evidence of an interest in a scholarship or educational plan or trust".

Section 8.19 provides an exemption from the dealer registration requirement for the trade when the plan is created but only under the conditions described in subsection 8.19(2).

Division 2 Exemptions from adviser registration

8.25 Advising generally

Section 8.25 contains an exemption from the requirement to register as an adviser if the advice is not tailored to the needs of the recipient.

In general, we would not consider advice about specific securities to be tailored to the needs of the recipient if it:

• is a general discussion of the merits and risks of the security

• is delivered through investment newsletters, articles in general circulation newspapers or magazines, websites, e-mail, Internet chat rooms, bulletin boards, television or radio, and

• does not claim to be tailored to the needs and circumstances of any recipient

This type of general advice can also be given at conferences. However, if a purpose of the conference is to solicit the audience and generate specific trades in specific securities, we may consider the advice to be tailored or we may consider the individual or firm giving the advice to be engaged in trading activity.

Under subsection 8.25(3), if an individual or firm relying on the exemption has a financial or other interest in the securities they recommend, they must disclose the interest to the recipient when they make the recommendation.

8.26 International adviser

This exemption allows international advisers to provide limited services to Canadian permitted clients, as defined in section 8.26, without having to register in Canada. International advisers that seek wider access to Canadian investors must register in an appropriate category. Unlike the exemption for international dealers in section 8.18, this exemption is not available where the client is registered under securities legislation of Canada as an adviser or dealer.

Incidental advice on Canadian securities

An international adviser relying on the exemption in section 8.26 may advise in Canada on foreign securities without having to register. It may also advise in Canada on securities of Canadian issuers, but only to the extent that the advice is incidental to its acting as an adviser for foreign securities.

However, this is not an exception or a "carve-out" that allows some portion of a permitted client's portfolio to be made up of Canadian securities chosen by the international adviser without restriction. Any advice with respect to Canadian securities must be directly related to the activity of advising on foreign securities. Permissible incidental advice would include, for example:

• an international adviser, when advising on a portfolio with a particular investment objective, such as gold mining companies, could advise on securities of a Canadian gold mining company within that portfolio, provided that the portfolio is otherwise made up of foreign securities

• an international adviser, having a mandate to advise on equities traded on European exchanges could advise with respect to the securities of a Canadian corporation traded on a European exchange, to the extent that Canadian corporation forms part of the mandate

Revenue derived in Canada

An international adviser is only permitted to undertake a prescribed amount of business in Canada. In making the calculation required under paragraph 8.26(4)(d), it is necessary to include all revenues derived from portfolio management activities in Canada, which would include any sub-adviser arrangements. However, the calculation of aggregate consolidated gross revenue derived in Canada does not include the gross revenue of affiliates that are registered in a jurisdiction of Canada.

An international adviser is not required to monitor Canadian revenue on an ongoing basis. Eligibility for the exemption is assessed with reference to revenues as of the end of the adviser's last financial year. The 10% threshold in paragraph 8.26(4)(d) is determined by looking back at the revenue of the firm and its affiliates "during its most recently completed financial year".

Notice requirement

If a firm is relying on the exemption in more than one jurisdiction, it must provide an initial notice by filing a Form 31-103F2 with the regulator in each jurisdiction where it relies on the exemption. If there is any change to the information in the firm's Form 31-103F2, it must update it by filing a replacement Form 31-103F2 with them.

So long as the firm continues to rely on the exemption, it must file an annual notice with each regulator. Subsection 8.26(5) does not prescribe a form of annual notice. An email or letter will therefore be acceptable.

In Ontario, compliance with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees satisfies the annual notification requirement in subsection (5).

Division 3 Exemptions from investment fund manager registration

8.28 Capital accumulation plan exemption

Section 8.28 provides an exemption from the investment fund manager registration requirement to an individual or firm that administers a capital accumulation plan. If an investment fund manager is also required to register as a dealer or adviser, this exemption only applies to their activities as an investment fund manager.

Division 4 Mobility exemption -- firms

8.30 Client mobility exemption -- firms

The mobility exemption in section 8.30 allows registered firms to continue dealing with and advising clients who move to another jurisdiction, without registering in that other jurisdiction. Section 2.2 Client mobility exemption - individuals contains a similar exemption for registered individuals.

The exemption becomes available when the client (not the registrant) moves to another jurisdiction. A registered firm may deal with up to 10 "eligible" clients in each other jurisdiction. Each of the client, their spouse and any children are an eligible client.

A firm may only rely on the exemption if:

• it is registered in its principal jurisdiction

• it only acts as a dealer, underwriter or adviser in the other jurisdiction as permitted under its registration in its principal jurisdiction

• the individual acting on its behalf is eligible for the exemption in section 2.2

• it complies with Parts 13 [Dealing with clients -- individuals and firms] and 14 [Handling client accounts -- firms], and

• it acts fairly, honestly and in good faith in its dealings with the eligible client

Firm's responsibilities for individuals relying on the exemption

In order for a registered individual to rely on the exemption in section 2.2, their sponsoring firm must disclose to the eligible client that the individual and if applicable, the firm, are exempt from registration in the other jurisdiction and are not subject to the requirements of securities legislation in that jurisdiction.

As soon as possible after an individual first relies on the exemption in section 2.2, their sponsoring firm must complete and file Form 31-103F3 in the other jurisdiction.

The registered firm must have appropriate policies and procedures for supervising individuals who rely on a mobility exemption. Registered firms must also keep appropriate records to demonstrate they are complying with the conditions of the mobility exemption.

See the guidance in section 2.2 of this Companion Policy on the client mobility exemption available to individuals.

Part 9 Membership in a self-regulatory organization

9.3 Exemptions from certain requirements for IIROC members

9.4 Exemptions from certain requirements for MFDA members

NI 31-103 now has two distinct sections, section 9.3 and 9.4, which distinguish the exemptions which are available on the basis of whether or not the member of IIROC or the MFDA is registered in another category. This clarifies our intent with respect to the exemptions for SRO members and recognizes that IIROC and the MFDA have rules in these areas.

Sections 9.3 and 9.4 contain exemptions from certain requirements for investment dealers that are IIROC members, for mutual fund dealers that are MFDA members and in Québec, for mutual fund dealers to the extent equivalent requirements are applicable under the regulations in Québec.

However, if an SRO member is registered in another category, these sections do not exempt them from their obligations as a registrant in that category. For example, if a firm is registered as an investment fund manager and as an investment dealer with IIROC, section 9.3 does not exempt them from their obligations as an investment fund manager under NI 31-103.

However SRO members that are registered in multiple categories may use the forms prescribed by the SROs, on certain conditions. See sections 12.1, 12.12 and 12.14 for requirements on calculating working capital and the delivery of working capital calculations for SRO members that are registered in multiple categories.

Part 10 Suspension and revocation of registration -- firms

The requirements for surrendering registration and additional requirements for suspending and revoking registration are found in the securities legislation of each jurisdiction. The guidance for Part 10 relates to requirements under both securities legislation and NI 31-103.

There is no renewal requirement for registration but firms must pay fees every year to maintain their registration and the registration of individuals acting on their behalf. A registered firm may carry on the activities for which it is registered until its registration is:

• suspended automatically under NI 31-103

• suspended by the regulator under certain circumstances, or

• surrendered by the firm

Division 1 When a firm's registration is suspended

Suspension

A firm whose registration has been suspended must not carry on the activity it is registered for. The firm otherwise remains a registrant and is subject to the jurisdiction of the regulator. A suspension remains in effect until the regulator reinstates or revokes the firm's registration.

If a firm that is registered in more than one category is suspended in one of the categories, the regulator will consider whether to suspend the firm's registration in other categories or to impose terms and conditions, subject to an opportunity to be heard.

Automatic suspension

A firm's registration will automatically be suspended if:

• it fails to pay its annual fees within 30 days of the due date

• it ceases to be a member of IIROC, or

• except in Québec, it ceases to be a member of the MFDA

Firms do not have an opportunity to be heard by the regulator in the case of any automatic suspension.

10.1 Failure to pay fees

Under section 10.1, a firm's registration will be automatically suspended if it has not paid its annual fees within 30 days of the due date.

10.2 If IIROC membership is revoked or suspended

Under section 10.2, if IIROC suspends or revokes a firm's membership, the firm's registration as an investment dealer is suspended until reinstated or revoked.

10.3 If MFDA membership is revoked or suspended

Under section 10.3, if the MFDA suspends or revokes a firm's membership, the firm's registration as a mutual fund dealer is suspended until reinstated or revoked. Section 10.3 does not apply in Québec.

Suspension in the public interest

A firm's registration may be suspended if the regulator exercises its power under securities legislation and determines that it is no longer in the public interest for the firm to be registered. The regulator may do this if it has serious concerns about the ongoing fitness of the firm or any of its registered individuals. For example, this may be the case if a firm or one or more of its registered or permitted individuals is charged with a crime, in particular fraud or theft.

Reinstatement

"Reinstatement" means that a suspension on a registration has been lifted. Once reinstated, a firm may resume carrying on the activity it is registered for.

Division 2 Revoking a firm's registration

Revocation

10.5 Revocation of a suspended registration -- firm

10.6 Exception for firms involved in a hearing

Under sections 10.5 and 10.6, if a firm's registration has been suspended under Part 10 and has not been reinstated, it is revoked on the second anniversary of the suspension, except if a hearing or proceeding concerning the suspended registrant has commenced. In this case the registration remains suspended.

"Revocation" means that the regulator has terminated the firm's registration. A firm whose registration has been revoked must submit a new application if it wants to be registered again.

Surrender

A firm may apply to surrender its registration in one or more categories at any time. There is no prescribed form for an application to surrender. A firm should file an application to surrender registration with its principal regulator. If Ontario is a non-principal jurisdiction, it should also file the application with the regulator in Ontario. See the Companion Policy to Multilateral Instrument 11-102 Passport System for more details on filing an application to surrender.

Before the regulator accepts a firm's application to surrender registration, the firm must provide the regulator with evidence that the firm's clients have been dealt with appropriately. This evidence does not have to be provided when a registered individual applies to surrender registration. This is because the sponsoring firm will continue to be responsible for meeting obligations to clients who may have been served by the individual.

The regulator does not have to accept a firm's application to surrender its registration. Instead, the regulator can act in the public interest by suspending, or imposing terms and conditions on, the firm's registration.

When considering a registered firm's application to surrender its registration, the regulator typically considers the firm's actions, the completeness of the application and the supporting documentation.

The firm's actions

The regulator may consider whether the firm:

• has stopped carrying on activity requiring registration

• proposes an effective date to stop carrying on activity requiring registration that is within six months of the date of the application to surrender, and

• has paid any outstanding fees and submitted any outstanding filings at the time of filing the application to surrender

Completeness of the application

Among other things, the regulator may look for:

• the firm's reasons for ceasing to carry on activity requiring registration

• satisfactory evidence that the firm has given all of its clients reasonable notice of its intention to stop carrying on activity requiring registration, including an explanation of how it will affect them in practical terms, and

• satisfactory evidence that the firm has given appropriate notice to the SRO, if applicable

Supporting documentation

The regulator may look for:

• evidence that the firm has resolved all outstanding client complaints, settled all litigation, satisfied all judgments or made reasonable arrangements to deal with and fund any payments relating to them, and any subsequent client complaints, settlements or liabilities

• confirmation that all money or securities owed to clients has been returned or transferred to another registrant, where possible, according to client instructions

• up-to-date audited financial statements with an auditor's comfort letter

• evidence that the firm has satisfied any SRO requirements for withdrawing membership, and

• an officer's or partner's certificate supporting these documents

Part 11 Internal controls and systems

General business practices -- outsourcing

Registered firms are responsible and accountable for all functions that they outsource to a service provider. Firms should have a written, legally binding contract that includes the expectations of the parties to the outsourcing arrangement.

Registered firms should follow prudent business practices and conduct a due diligence analysis of prospective third-party service providers. This includes third-party service providers that are affiliates of the firm. Due diligence should include an assessment of the service provider's reputation, financial stability, relevant internal controls and ability to deliver the services.

Firms should also:

• ensure that third-party service providers have adequate safeguards for keeping information confidential and, where appropriate, disaster recovery capabilities

• conduct ongoing reviews of the quality of outsourced services

• develop and test a business continuity plan to minimize disruption to the firm's business and its clients if the third-party service provider does not deliver its services satisfactorily, and

• note that other legal requirements, such as privacy laws, may apply when entering into outsourcing arrangements

The regulator, the registered firm and the firm's auditors should have the same access to the work product of a third-party service provider as they would if the firm itself performed the activities. Firms should ensure this access is provided and include a provision requiring it in the contract with the service provider, if necessary.

Division 1 Compliance

11.1 Compliance system

General principles

Section 11.1 requires registered firms to establish, maintain and apply policies and procedures that establish a system of controls and supervision (a compliance system) that:

• provides assurance that the firm and individuals acting on its behalf comply with securities legislation, and

• manages the risks associated with the firm's business in accordance with prudent business practices

Operating an effective compliance system is essential to a registered firm's continuing fitness for registration. It provides reasonable assurance that the firm is meeting, and will continue to meet, all requirements of applicable securities laws and SRO rules and is managing risk in accordance with prudent business practices. A compliance system should include internal controls and monitoring systems that are reasonably likely to identify non-compliance at an early stage and supervisory systems that allow the firm to correct non-compliant conduct in a timely manner.

The responsibilities of the UDP are set out in section 5.1 and those of the CCO in section 5.2 . However, compliance is not only a responsibility of a specific individual or a compliance department of the firm, but rather is a firm-wide responsibility and an integral part of the firm's activities. Everyone in the firm should understand the standards of conduct for their role. This includes the board of directors, partners, management, employees and agents, whether or not they are registered.

Having a UDP and CCO, and in larger firms, a compliance group and other supervisory staff, does not relieve anyone else in the firm of the obligation to report and act on compliance issues. A compliance system should identify those who will act as alternates in the absence of the UDP or CCO.

Elements of an effective compliance system

While policies and procedures are essential, they do not make an acceptable compliance system on their own. An effective compliance system also includes internal controls, day to day and systemic monitoring, and supervision elements.

Internal controls

Internal controls are an important part of a firm's compliance system. They should mitigate risk and protect firm and client assets. They should be designed to assist firms in monitoring compliance with securities legislation and managing the risks that affect their business, including risks that may relate to:

• safeguarding of client and firm assets

• accuracy of books and records

• trading, including personal and proprietary trading

• conflicts of interest

• money laundering

• business interruption

• hedging strategies

• marketing and sales practices, and

• the firm's overall financial viability

Monitoring and supervision

Monitoring and supervision are essential elements of a firm's compliance system. They consist of day to day monitoring and supervision, and overall systemic monitoring.

(a) Day to day monitoring and supervision

In our view, an effective monitoring and supervision system includes:

• monitoring to identify specific cases of non-compliance or internal control weaknesses that might lead to non-compliance

• referring non-compliance or internal control weaknesses to management or other individuals with authority to take supervisory action to correct them

• taking supervisory action to correct them, and

• minimizing the compliance risk in key areas of a firm's operations

In our view, effective day to day monitoring should include, among other things

• approving new account documents

• reviewing and, in some cases, approving transactions

• approving marketing materials, and

• preventing inappropriate use or disclosure of non-public information.

Firms can use a risk-based approach to monitoring, such as reviewing an appropriate sample of transactions.

The firm's management is responsible for the supervisory element of correcting non-compliance or internal control weaknesses. However, at a firm's discretion, its CCO may be given supervisory authority, but this is not a necessary component of the CCO's role.

Anyone who supervises registered individuals has a responsibility on behalf of the firm to take all reasonable measures to ensure that each of these individuals:

• deals fairly, honestly and in good faith with their clients

• complies with securities legislation

• complies with the firm's policies and procedures, and

• maintains an appropriate level of proficiency

(b) Systemic monitoring

Systemic monitoring involves assessing, and advising and reporting on the effectiveness of the firm's compliance system. This includes ensuring that:

• the firm's day to day supervision is reasonably effective in identifying and promptly correcting cases of non-compliance and internal control weaknesses

• policies and procedures are enforced and kept up to date, and

• everyone at the firm generally understands and complies with the policies and procedures, and with securities legislation

Specific elements

More specific elements of an effective compliance system include:

(a) Visible commitment

Senior management and the board of directors or partners should demonstrate a visible commitment to compliance.

(b) Sufficient resources and training

The firm should have sufficient resources to operate an effective compliance system. Qualified individuals (including anyone acting as an alternate during absences) should have the responsibility and authority to monitor the firm's compliance, identify any instances of non-compliance and take supervisory action to correct them.

The firm should provide training to ensure that everyone at the firm understands the standards of conduct and their role in the compliance system, including ongoing communication and training on changes in regulatory requirements or the firm's policies and procedures.

(c) Detailed policies and procedures

The firm should have detailed written policies and procedures that:

• identify the internal controls the firm will use to ensure compliance with legislation and manage risk

• set out the firm's standards of conduct for compliance with securities and other applicable legislation and the systems for monitoring and enforcing compliance with those standards

• clearly outline who is expected to do what, when and how

• are readily accessible by everyone who is expected to know and follow them

• are updated when regulatory requirements and the firm's business practices change, and

• take into consideration the firm's obligation under securities legislation to deal fairly, honestly and in good faith with its clients

(d) Detailed records

The firm should keep records of activities conducted to identify compliance deficiencies and the action taken to correct them.

Setting up a compliance system

It is up to each registered firm to determine the most appropriate compliance system for its operations. Registered firms should consider the size and scope of their operations, including products, types of clients or counterparties, risks and compensating controls, and any other relevant factors.

For example, a large registered firm with diverse operations may require a large team of compliance professionals with several divisional heads of compliance reporting to a CCO dedicated entirely to a compliance role.

All firms must have policies, procedures and systems to demonstrate compliance. However, some of the elements noted above may be unnecessary or impractical for smaller registered firms.

We encourage firms to meet or exceed industry best practices in complying with regulatory requirements.

11.2 Designating an ultimate designated person

Under subsection 11.2(1), registered firms must designate an individual to be the UDP. Firms should ensure that the individual understands and is able to perform the obligations of a UDP under section 5.1.The UDP must be:

• the chief executive officer (CEO) of the registered firm or the individual acting in a similar capacity, if the firm does not have a CEO. The person acting in a similar capacity to a CEO is the most senior decision maker in the firm, who might have the title of managing partner or president, for example

• the sole proprietor of the registered firm, or

• the officer in charge of a division of the firm that carries on all of the registerable activity if the firm also has significant other business activities, such as insurance, conducted in different divisions. This is not an option if the core business of the firm is trading or advising in securities and it only has some other minor operations conducted in other divisions. In this case, the UDP must be the CEO or equivalent.

To designate someone else as the UDP requires an exemptive relief order. Given that the intention of section 11.2 is to ensure that responsibility for its compliance system rests at the very top of a firm, we will only grant relief in rare cases.

We note that in larger organizations, the UDP is sometimes supported by an officer who has a compliance oversight role and title within the organization and who is more senior than the CCO. We have no objection to such arrangements, but it must be understood that they can in no way diminish the UDP's regulatory responsibilities.

If the person designated as the UDP no longer meets these requirements, and the registered firm is unable to designate another UDP, the firm should promptly advise the regulator of the actions it is taking to designate a new UDP who meets these requirements.

11.3 Designating a chief compliance officer

Under subsection 11.3(1), registered firms must designate an individual to be the CCO. Firms should ensure that the individual understands and is able to perform the obligations of a CCO under section 5.2.

The CCO must meet the applicable proficiency requirements in Part 3 and be:

• an officer or partner of the registered firm, or

• the sole proprietor of the registered firm

If the CCO no longer meets any of the above conditions and the registered firm is unable to designate another CCO, the firm should promptly advise the regulator of the actions it is taking to designate an appropriate CCO.

Division 2 Books and records

Under securities legislation, the regulator may access, examine and take copies of a registered firm's records. The regulator may also conduct regular and unscheduled compliance reviews of registered firms.

11.5 General requirements for records

Under subsection 11.5(1), registered firms must maintain records to accurately record their business activities, financial affairs and client transactions, and demonstrate compliance with securities legislation.

The following discussion provides guidance for the various elements of the records described in subsection 11.5(2).

Financial affairs

The records required under subsections 11.5(2)(a), (b) and (c) are records firms must maintain to help ensure they are able to prepare and file financial information, determine their capital position, including the calculation of excess working capital, and generally demonstrate compliance with the capital and insurance requirements.

Client transactions

The records required under subsections 11.5(2)(g), (h), (i), (l) and (n) are records firms must maintain to accurately and fully document transactions entered into on behalf of a client. We expect firms to maintain notes of communications that could have an impact on the client's account or the client's relationship with the firm. These communications include

• oral communications

• all e-mail, regular mail, fax and other written communications

While we do not expect registered firms to save every voicemail or e-mail, or to record all telephone conversations with clients, we do expect that registered firms maintain records of all communications relating to orders received from their clients.

The records required under subsection 11.5(2)(g) should document buy and sell transactions, referrals, margin transactions and any other activities relating to a client's account. They include records of all actions leading to trade execution, settlement and clearance, such as trades on exchanges, alternative trading systems, over-the-counter markets, debt markets, and distributions and trades in the prospectus-exempt market.

Examples of these records are:

• trade confirmation statements

• summary information about account activity

• communications between a registrant and its client about particular transactions, and

• records of transactions resulting from securities a client holds, such as dividends or interest paid, or dividend reinvestment program activity

Subsection 11.5(2)(l) requires firms to maintain records that demonstrate compliance with the know your client obligations in section 13.2 and the suitability obligations in section 13.3. This includes records for unsuitable trades in subsection 13.3(2).

Client relationship

The records required under subsection 11.5(2)(k) and (m) should document information about a registered firm's relationship with its client and relationships that any representatives have with that client.

These records include:

• communication between the firm and its clients, such as disclosure provided to clients and agreements between the registrant and its clients

• account opening information

• change of status information provided by the client

• disclosure and other relationship information provided by the firm

• margin account agreements

• communications regarding a complaint made by the client

• actions taken by the firm regarding a complaint

• communications that do not relate to a particular transaction, and

• conflicts records

Each record required under subsection 11.5(2)(k) should clearly indicate the name of the accountholder and the account the record refers to. A record should include information only about the accounts of the same accountholder or group. For example, registrants should have separate records for an individual's personal accounts and for accounts of a legal entity that the individual owns or jointly holds with another party.

Where applicable, the financial details should note whether the information is for an individual or a family. This includes spousal income and net worth. The financial details for accounts of a legal entity should note whether the information refers to the entity or to the owner(s) of the entity.

If the registered firm permits clients to complete new account forms themselves, the forms should use language that is clear and avoids terminology that may be unfamiliar to unsophisticated clients.

Internal controls

The records required under subsection 11.5(2)(d), (e), (f), (j) and (o) are records firms must maintain to support the internal controls and supervision components of their compliance system.

11.6 Form, accessibility and retention of records

Third party access to records

Subsection 11.6(1)(b) requires registered firms to keep their records in a safe location. This includes ensuring that no one has unauthorized access to information, particularly confidential client information. Registered firms should be particularly vigilant if they maintain books and records in a location that may be accessible by a third party. In this case, the firm should have a confidentiality agreement with the third party.

Division 3 Certain business transactions

11.8 Tied selling

Section 11.8 prohibits an individual or firm from engaging in abusive sales practices such as selling a security on the condition that the client purchase another product or service from the registrant or one of its affiliates. These types of practices are known as "tied selling". In our view, this section would be contravened if, for example, a financial institution agreed to lend money to a client only if the client acquired securities of mutual funds sponsored by the financial institution.

However, section 11.8 is not intended to prohibit relationship pricing or other beneficial selling arrangements similar to relationship pricing. Relationship pricing refers to the practice of industry participants offering financial incentives or advantages to certain clients.

11.9 Registrant acquiring a registered firm's securities or assets

Under section 11.9, registrants must give the regulator notice if they propose to purchase securities or assets of a registered firm or the parent of a registered firm. For purposes of this section, a registered firm's book of business would be a substantial part of the assets of the registered firm. This notice gives the regulator an opportunity to consider ownership issues that may affect a firm's fitness for registration.

Subsection 11.9(4) does not apply in British Columbia. However, the regulator in British Columbia may exercise discretion under section 36 or 161 of the BC Securities Act (BCSA) to impose conditions, restrictions or requirements on the registrant's registration or to suspend or revoke the registration if it decides that an acquisition would affect the registrant's fitness for registration or be prejudicial to the public interest. In these circumstances, the registrant would be entitled to an opportunity to be heard, except if the regulator issues a temporary order under section 161 of the BCSA.

11.10 Registered firm whose securities are acquired

Under section 11.10, registered firms must notify the regulator if they know or have reason to believe that any individual or firm is about to purchase more than 10% of the voting securities of the firm or the firm's parent. This notice gives the regulator an opportunity to consider ownership issues that may affect a firm's fitness for registration. We expect this notice to be sent as soon as the registered firm knows or has reason to believe such a transaction is going to take place.

We expect any individual or firm that buys assets of a registered firm and is not already a registrant will have to apply for registration. We will assess their fitness for registration when they apply.

Subsection 11.10(5) does not apply in British Columbia. However, the regulator in British Columbia may exercise discretion under section 36 or 161 of the BCSA to impose conditions, restrictions or requirements on the registrant's registration or to suspend or revoke the registration if it decides that an acquisition would affect the registrant's fitness for registration or be prejudicial to the public interest. In these circumstances, the registrant would be entitled to an opportunity to be heard, except if the regulator issues a temporary order under section 161 of the BCSA.

Part 12 Financial condition

Division 1 Working capital

12.1 Capital requirements

Frequency of working capital calculations

Section 12.1 requires registered firms to notify the regulator as soon as possible if their excess working capital is less than zero.

Registered firms should know their working capital position at all times. This may require a firm to calculate its working capital every day. The frequency of working capital calculations depends on many factors, including the size of the firm, the nature of its business and the stability of the components of its working capital. For example, it may be sufficient for a sole proprietor firm with a dedicated and stable source of working capital to do the calculation on a monthly basis.

Form 31-103F1 - Calculation of excess working capital

Application of NI 52-107 Acceptable Accounting Principles and Auditing Standards

Form 31-103F1 -- Calculation of Excess Working Capital (Form 31-103F1) must be prepared using the accounting principles used to prepare financial statements in accordance with National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107). Refer to section 12.10 of this Companion Policy and Companion Policy 52-107 Acceptable Accounting Principles and Auditing Standards (52-107CP) for further guidance on audited financial statements.

IIROC and MFDA member firms that are also registered in another category

IIROC and MFDA member firms that are also registered in a category that does not require SRO membership must still comply with the financial filing requirements in Part 12 [Financial condition], even if they are relying on the exemptions in sections 9.3 and 9.4. Provided certain conditions are met, SRO members that are registered in other categories may be permitted to calculate their working capital in accordance with the SRO forms and file the SRO forms instead of Form 31-103F1 .

For example, if the SRO firm is also an investment fund manager, it will need to report any net asset value (NAV) adjustments quarterly in order to comply with the investment fund manager requirements, notwithstanding that its SRO has no such requirements. However, they may be permitted to calculate their working capital in accordance with the SRO forms and file the SRO forms instead of Form 31-103F1. See sections 12.1, 12.12 and 12.14 for the requirements on delivery of working capital calculations for SRO members that are registered in multiple categories.

Working capital requirements are not cumulative

The working capital requirements for registered firms set out in section 12.1 are not cumulative. If a firm is registered in more than one category, it must meet the highest capital requirement of its categories of registration, except for those investment fund managers who are also registered as portfolio managers and meet the requirements of the exemption in section 8.6. These investment fund managers need only meet the lower capital requirement for portfolio managers.

If a registrant becomes insolvent or declares bankruptcy

The regulator will review the circumstances of a registrant's insolvency or bankruptcy on a case-by-case basis. If the regulator has concerns, it may impose terms and conditions on the registrant's registration, such as close supervision and delivering progress reports to the regulator, or it may suspend the registrant's registration.

12.2 Subordination agreements

Long-term related party debt must be deducted from a firm's working capital on Form 31-103F1, unless the firm and the lender have executed a subordination agreement in the form set out in Appendix B of NI 31-103 and delivered a copy of that agreement with the regulator.

Division 2 Insurance

Insurance coverage limits

Registrants must maintain bonding or insurance that provides for a "double aggregate limit" or a "full reinstatement of coverage" (also known as "no aggregate limit"). The insurance provisions state that the registered firm must "maintain" bonding or insurance in the amounts specified. We do not expect that the calculation would differ materially from day to day. If there is a material change in a firm's circumstances, it should consider the potential impact on its ability to meet its insurance requirements.

Most insurers offer aggregate limit policies that contain limits based on a single loss and on the number or value of losses that occur during the coverage period.

Double aggregate limit policies have a specified limit for each claim. The total amount that may be claimed during the coverage period is twice that limit. For example, if an adviser maintains a financial institution bond of $50,000 for each clause with a double aggregate limit, the adviser's coverage is $50,000 for any one claim and $100,000 for all claims during the coverage period.

Full reinstatement of coverage policies and no aggregate limit policies have a specified limit for each claim but no limit on the number of claims or losses during the coverage period. For example, if an adviser maintains a financial institution bond of $50,000 for each clause with a full reinstatement of coverage provision, the adviser's maximum coverage is $50,000 for any one claim, but there is no limit on the total amount that can be claimed under the bond during the coverage period.

Insurance requirements are not cumulative

Insurance requirements are not cumulative. For example, a firm registered in the categories of portfolio manager and investment fund manager need only maintain insurance coverage for the higher of the amounts required for each registration category. Despite being registered as both a portfolio manager and an investment fund manager, when calculating the investment fund manager insurance requirement under subsection 12.5(2), an investment fund manager should only include the total assets under management of its own investment funds. It is only with respect to its own funds that the registrant is acting as an investment fund manager.

12.4 Insurance - adviser

The insurance requirements for advisers depend in part on whether the adviser holds or has access to client assets.

An adviser will be considered to hold or have access to client assets if they do any of the following:

• hold client securities or cash for any period

• accept funds from clients, for example, a cheque made payable to the registrant

• accept client money from a custodian, for example, client money that is deposited in the registrant's bank or trust accounts before the registrant issues a cheque to the client

• have the ability to gain access to client assets

• have, in any capacity, legal ownership of, or access to, client funds or securities

• have the authority, such as under a power of attorney, to withdraw funds or securities from client accounts

• have authority to debit client accounts to pay bills other than investment management fees

• act as a trustee for clients, or

• act as fund manager or general partner for investment funds

12.6 Global bonding or insurance

Registered firms may be covered under a global insurance policy. Under this type of policy, the firm is insured under a parent company's policy that covers the parent and its subsidiaries or affiliates. Firms should ensure that the claims of other entities covered under a global insurance policy do not affect the limits or coverage applicable to the firm.

Division 4 Financial reporting

12.10 Annual financial statements and interim financial information

Accounting Principles

Registrants are required to deliver annual financial statements and interim financial information that comply with NI 52-107. Depending on the financial year, a registrant will look to different parts of NI 52-107 to determine which accounting principles and auditing standards apply:

• Part 3 of NI 52-107 applies for financial years beginning on or after January 1, 2011;

• Part 4 of NI 52-107 applies to financial years beginning before January 1, 2011.

Part 3 of NI 52-107 refers to Canadian GAAP applicable to publicly accountable enterprises, which is IFRS as incorporated into the Handbook. Under Part 3 of NI 52-107, annual financial statements and interim financial information delivered by a registrant must be prepared in accordance with Canadian GAAP applicable to publicly accountable enterprises except that any investments in subsidiaries, jointly controlled entities and associates must be accounted for as specified for separate financial statements in International Accounting Standard 27 Consolidated and Separate Financial Statements. Separate financial statements are sometimes referred to as non-consolidated financial statements.

Section 3.2(3) of NI 52-107 requires annual financial statements to include a statement and description about this required financial reporting framework. Section 2.7 of 52-107CP provides guidance on section 3.2(3). We remind registrants to refer to these provisions in NI 52-107 and 52-107CP in preparing their annual financial statements and interim financial information.

Part 4 of NI 52-107 refers to Canadian GAAP for public enterprises, which is Canadian GAAP as it existed before the mandatory effective date for the adoption of IFRS, included in the Handbook as Part V. Under Part 4 of NI 52-107, annual financial statements and interim financial information delivered by a registrant must be prepared in accordance with Canadian GAAP for public enterprises except that the financial statements and interim financial information must be prepared on a non-consolidated basis.

Changeover to International Financial Reporting Standards

When preparing annual financial statements, interim financial information or Form 31-103F1 for a financial year beginning in 2011 or for interim periods relating to a financial year beginning in 2011, registrants may rely on the exemption in subsection 12.15(1) and exclude comparative information for the preceding financial year. Section 3.2(4) of NI 52-107 provides a corresponding exemption for the accounting principles used by registrants. If a registrant relies on these exemptions, its date of transition to IFRS will be the first day of its financial year beginning in 2011. Section 2.7 of 52-107CP provides further guidance on this topic. We remind registrants to refer to the provisions in NI 52-107 and 52-107CP in preparing their financial statements and interim financial information for a financial period beginning in 2011.

12.14 Delivering financial information -- investment fund manager

NAV errors and adjustments

Section 12.14 requires investment fund managers to periodically deliver to the regulator, among other things, a description of any NAV adjustment. A NAV adjustment is necessary when there has been a material error and the NAV per unit does not accurately reflect the actual NAV per unit at the time of computation.

Some examples of the causes of NAV errors are:

• mispricing of a security

• corporate action recorded incorrectly

• incorrect numbers used for issued and outstanding units

• incorrect expenses and income used or accrued

• incorrect foreign exchange rates used in the valuation, and

• human error, such as inputting an incorrect value

We expect investment fund managers to have policies that clearly define what constitutes a material error that requires an adjustment, including threshold levels, and how to correct material errors. If an investment fund manager does not have a threshold in place, it may wish to consider the threshold in IFIC Bulletin Number 22 Correcting Portfolio NAV Errors or adopt a more stringent policy.

Part 13 Dealing with clients - individuals and firms

Division 1 Know your client and suitability

13.2 Know your client

General principles

Registrants act as gatekeepers of the integrity of the capital markets. They should not, by act or omission, facilitate conduct that brings the market into disrepute. As part of their gatekeeper role, registrants are required to establish the identity of, and conduct due diligence on, their clients under the know your client (KYC) obligation in section 13.2. Complying with the KYC obligation can help ensure that trades are completed in accordance with securities laws.

KYC information forms the basis for determining whether trades in securities are suitable for investors. This helps protect the client, the registrant and the integrity of the capital markets. The KYC obligation requires registrants to take reasonable steps to obtain and periodically update information about their clients.

Verifying a client's reputation

Subsection 13.2(2)(a) requires registrants to make inquiries if they have cause for concern about a client's reputation. The registrant must make all reasonable inquiries necessary to resolve the concern. This includes making a reasonable effort to determine, for example, the nature of the client's business or the identity of beneficial owners where the client is a corporation, partnership or trust. See subsection 13.2(3) for additional guidance on identifying clients that are corporations, partnerships or trusts.

Identifying insiders

Under subsection 13.2(2)(b), a registrant must take reasonable steps to establish whether the client is an insider of a reporting issuer or any other issuer whose securities are publicly traded.

We consider "reasonable steps" to include explaining to the client what an insider is and what it means for securities to be publicly traded.

For purposes of this paragraph, "reporting issuer" has the meaning given to it in securities legislation and "other issuer" means any issuer whose securities are traded in any public market. This includes domestic, foreign, exchange-listed and over-the-counter markets. This definition does not include issuers whose securities have been distributed through a private placement and are not freely tradeable.

A registrant need not ascertain whether the client is an insider if the only securities traded for the client are mutual fund securities and scholarship plan securities referred to in sections 7.1(2)(b) and 7.1(2)(c). However, we encourage firms, when selling highly concentrated pooled funds, to enquire as to whether a client is an insider of the issuer of any securities held by the fund, notwithstanding the exemption provided in subsection 13.2(7). In addition, we remind registrants that they remain subject to the requirement in section 13.2(2)(b) when they trade any other securities than those listed in sections 7.1(2)(b) and 7.1(2)(c).

This exemption does not change an insider's reporting and conduct responsibilities.

Clients that are corporations, partnerships or trusts

Subsection 13.2(3) requires registrants to establish the identity of any person who owns or controls 25% or more of the shares of a client that is a corporation or exercises control over the affairs of a client that is a partnership or trust. We remind registrants that this is in addition to the requirement in subsection 13.2(2)(a) which requires registrants to make inquiries if they have cause for concern about a client's reputation. If a registrant has cause for concern about a particular client that is a corporation, partnership or trust, they may need to identify all beneficial owners of such entity.

Keeping KYC information current

Under subsection 13.2(4), registrants are required to make reasonable efforts to keep their clients' KYC information current.

We consider information to be current if it is sufficiently up-to-date to support a suitability determination. For example, a portfolio manager with discretionary authority should update its clients' KYC information frequently. A dealer that only occasionally recommends trades to a client should ensure that the client's KYC information is up-to-date at the time a proposed trade or recommendation is made.

13.3 Suitability

Suitability obligation

Subsection 13.3(1) requires registrants to take reasonable steps to ensure that a proposed trade is suitable for a client before making a recommendation or accepting instructions from the client. To meet this suitability obligation, registrants should have in-depth knowledge of all securities that they buy and sell for, or recommend to, their clients. This is often referred to as the "know your product" or KYP obligation.

Registrants should know each security well enough to understand and explain to their clients the security's risks, key features, and initial and ongoing costs and fees. Having the registered firm's approval for representatives to sell a product does not mean that the product will be suitable for all clients. Individual registrants must still determine the suitability of each transaction for every client.

Registrants should also be aware of, and act in compliance with, the terms of any exemption being relied on for the trade or distribution of the security.

In all cases, we expect registrants to be able to demonstrate a process for making suitability determinations that are appropriate in the circumstances.

Suitability obligations cannot be delegated

Registrants may not:

• delegate their suitability obligations to anyone else, or

• satisfy the suitability obligation by simply disclosing the risks involved with a trade

Only permitted clients may waive their right to a suitability determination. Registrants must make a suitability determination for all other clients. If a client instructs a registrant to make a trade that is unsuitable, the registrant may not allow the trade to be completed until they warn the client as required under subsection 13.3(2).

KYC information for suitability depends on circumstances

The extent of KYC information a registrant needs to determine suitability of a trade will depend on the:

• client's circumstances

• type of security

• client's relationship to the registrant, and

• registrant's business model

In some cases, the registrant will need extensive KYC information, for example, if the registrant is a portfolio manager with discretionary authority. In these cases, the registrant should have a comprehensive understanding of the client's:

• investment needs and objectives, including the client's time horizon for their investments

• overall financial circumstances, including net worth, income, current investment holdings and employment status, and

• risk tolerance for various types of securities and investment portfolios, taking into account the client's investment knowledge

In other cases, the registrant may need less KYC information, for example, if the registrant only occasionally deals with a client who makes small investments relative to their overall financial position.

If the registrant recommends securities traded under the prospectus exemption for accredited investors in NI 45-106, the registrant should determine whether the client qualifies as an accredited investor.

If a client is opening more than one account, the registrant should indicate whether the client's investment objectives and risk tolerance apply to a particular account or to the client's whole portfolio of accounts.

Registered firm and financial institution clients

Under subsection 13.3(3), there is no obligation to make a suitability determination for a client that is a registered firm, a Canadian financial institution or a Schedule III bank.

Permitted clients

Under subsection 13.3(4), registrants do not have to make a suitability determination for a permitted client if:

• the permitted client has waived their right to suitability in writing, and

• the registrant does not act as an adviser for a managed account of the permitted client

A permitted client may waive their right to suitability for all trades under a blanket waiver.

SRO exemptions

SRO rules may also provide conditional exemptions from the suitability obligation, for example, for dealers who offer order execution only services.

Division 2 Conflicts of interest

13.4 Identifying and responding to conflicts of interest

Section 13.4 covers a broad range of conflicts of interest. It requires registered firms to take reasonable steps to identify existing material conflicts of interest and material conflicts that the firm reasonably expects to arise between the firm and a client. As part of identifying these conflicts, a firm should collect information from the individuals acting on its behalf regarding the conflicts they expect to arise with their clients.

We consider a conflict of interest to be any circumstance where the interests of different parties, such as the interests of a client and those of a registrant, are inconsistent or divergent.

Responding to conflicts of interest

A registered firm's policies and procedures for managing conflicts should allow the firm and its staff to:

• identify conflicts of interest that should be avoided

• determine the level of risk that a conflict of interest raises, and

• respond appropriately to conflicts of interest

When responding to any conflict of interest, registrants should consider their standard of care for dealing with clients and apply consistent criteria to similar types of conflicts of interest.

In general, three methods are used to respond to conflicts of interest:

• avoidance

• control, and

• disclosure

If a registrant allows a serious conflict of interest to continue, there is a high risk of harm to clients or to the market. If the risk of harming a client or the integrity of the markets is too high, the conflict needs to be avoided. If a registered firm does not avoid a conflict of interest, it should take steps to control or disclose the conflict, or both. The firm should also consider what internal structures or policies and procedures it should use or have to reasonably respond to the conflict of interest.

Avoiding conflicts of interest

Registrants must avoid all conflicts of interest that are prohibited by law. If a conflict of interest is not prohibited by law, registrants should avoid the conflict if it is sufficiently contrary to the interests of a client that there can be no other reasonable response.

For example, some conflicts of interest are so contrary to another person's or company's interest that a registrant cannot use controls or disclosure to respond to them. In these cases, the registrant should avoid the conflict, stop providing the service or stop dealing with the client.

Controlling conflicts of interest

Registered firms should design their organizational structures, lines of reporting and physical locations to control conflicts of interest effectively. For example, the following situations would likely raise a conflict of interest:

• advisory staff reporting to marketing staff

• compliance or internal audit staff reporting to a business unit, and

• registered representatives and investment banking staff in the same physical location

Depending on the conflict of interest, registered firms may control the conflict by:

• assigning a different representative to provide a service to the particular client

• creating a group or committee to review, develop or approve responses

• monitoring trading activity, or

• using information barriers for certain internal communication

Disclosing conflicts of interest

(a) When disclosure is appropriate

Registered firms should ensure that their clients are adequately informed about any conflicts of interest that may affect the services the firm provides to them. This is in addition to any other methods the registered firm may use to manage the conflict.

(b) Timing of disclosure

Under subsection 13.4(3), if a reasonable investor would expect to be informed of a conflict, a registered firm must disclose the conflict in a timely manner. Registered firms and their representatives should disclose conflicts of interest to their clients before or at the time they recommend the transaction or provide the service that gives rise to the conflict. This is to give clients a reasonable amount of time to assess the conflict.

We note that where this disclosure is provided to a client before the transaction takes place, we expect the disclosure to be provided shortly before the transaction takes place. For example, if it was initially provided with the client's account opening documentation months or years previously we expect that a registered representative would also disclose this conflict to the client shortly before the transaction or at the time the transaction is recommended.

For example, if a registered individual recommends a security that they own, this may constitute a material conflict which should be disclosed to the client before or at the time of the recommendation.

(c) When disclosure is not appropriate

Disclosure may not be appropriate if a conflict of interest involves confidential or commercially sensitive information, or the information amounts to "inside information" under insider trading provisions in securities legislation.

In these situations, registered firms will need to assess whether there are other methods to adequately respond to the conflict of interest. If not, the firm may have to decline to provide the service to avoid the conflict of interest.

Registered firms should also have specific procedures for responding to conflicts of interest that involve inside information and for complying with insider trading provisions.

(d) How to disclose a conflict of interest

Registered firms should provide disclosure about material conflicts of interest to their clients if a reasonable investor would expect to be informed about them. When a registered firm provides this disclosure, it should:

• be prominent, specific, clear and meaningful to the client, and

• explain the conflict of interest and how it could affect the service the client is being offered

Registered firms should not:

• provide generic disclosure

• give partial disclosure that could mislead their clients, or

• obscure conflicts of interest in overly detailed disclosure

Examples of conflicts of interest

This section describes specific situations where a registrant could be in a conflict of interest and how to manage the conflict.

Relationships with related or connected issuers

When a registered firm trades in, or recommends securities of, a related or connected issuer, it should respond to the resulting conflict of interest by disclosing it to the client.

To provide disclosure about conflicts with related issuers, a registered firm may maintain a list of the related issuers for which it acts as a dealer or adviser. It may make the list available to clients by:

• posting the list on its website and keeping it updated

• providing the list to the client at the time of account opening, or

• explaining to the client at the time of account opening how to contact the firm to request a copy of the list free of charge

The list may include examples of the types of issuers that are related or connected and the nature of the firm's relationship with those issuers. For example, a firm could generally describe the nature of its relationship with an investment fund within a family of investment funds. This would mean that the firm may not have to update the list when a new fund is added to that fund family.

However, this type of disclosure may not meet the expectations of a reasonable investor when a specific conflict with a related or connected issuer arises, for example, when a registered individual recommends a trade in the securities of a related issuer. In these circumstances, a registered firm should provide the client with disclosure about the specific conflict with that issuer. This disclosure should include a description of the nature of the firm's relationship with the issuer.

Like all disclosure, information regarding a conflict with a related or connected issuer should be made available to clients before or at the time of the advice or trade giving rise to the conflict, so that clients have a reasonable amount of time to assess it. Registrants should use their judgment for the best way and time to inform clients about these conflicts. Previous disclosure may no longer be relevant to, or remembered by, a client, while disclosure of the same conflict more than once in a short time may be unnecessary and confusing.

Firms do not have to disclose to clients their relationship with a related or connected issuer that is a mutual fund managed by an affiliate of the firm if the names of the firm and the fund are similar enough that a reasonable person would conclude they are affiliated.

Relationships with other issuers

Firms should assess whether conflicts of interest may arise in relationships with issuers that do not fall within the definitions of related or connected issuers. Examples include non-corporate issuers such as a trust, partnership or special purpose entity or conduit issuing asset-backed commercial paper. This is especially important if a registered firm or its affiliates are involved in sponsoring, manufacturing, underwriting or distributing these securities.

The registered firm should disclose the relationship with these types of issuers if it may give rise to a conflict of interest that a reasonable client would expect to be informed about.

Competing interests of clients

If clients of a registered firm have competing interests, the firm should make reasonable efforts to be fair to all clients. Firms should have internal systems to evaluate the balance of these interests.

For example, a conflict of interest can arise between investment banking clients, who want the highest price, lowest interest rate or best terms in general for their issuances of securities, and retail clients who will buy the product. The firm should consider whether the product meets the needs of retail clients and is competitive with alternatives available in the market.

Individuals who serve on a board of directors

(a) Board of directors of another registered firm

Under section 4.1, a registered individual must not act as a director of another registered firm that is not an affiliate of the individual's sponsoring firm.

(b) Board of directors of non registered persons or companies

Section 4.1 does not apply to registered individuals who act as directors of unregistered firms. However, significant conflicts of interest can arise when a registered individual serves on a board of directors. Examples include conflicting fiduciary duties owed to the company and to a registered firm or client, possible receipt of inside information and conflicting demands on the representative's time.

Registered firms should consider controlling the conflict by:

• requiring their representatives to seek permission from the firm to serve on the board of directors of an issuer, and

• having policies for board participation that identify the circumstances where the activity would not be in the best interests of the firm or its clients

The regulator will take into account the potential conflicts of interest that may arise when an individual serves on a board of directors when assessing that individual's application for registration or continuing fitness for registration.

Individuals who have outside business activities

Conflicts can arise when registered individuals are involved in outside business activities, for example, because of the compensation they receive for these activities or because of the nature of the relationship between the individual and the outside entity. Before approving any of these activities, registered firms should consider potential conflicts of interest. If the firm cannot properly control a potential conflict of interest, it should not permit the outside activity.

The regulator will take into account the potential conflicts of interest that may arise as a result of an individual's outside business activities when assessing that individual's application for registration or continuing fitness for registration.

Compensation practices

Registered firms should consider whether any particular benefits, compensation or remuneration practices are inconsistent with their obligations to clients, especially if the firm relies heavily on commission-based remuneration. For example, if there is a complex product that carries a high commission, the firm may decide that it is not appropriate to offer that product.

13.5 Restrictions on certain managed account transactions

Section 13.5 prohibits a registered adviser from engaging in certain transactions in investment portfolios it manages for clients on a discretionary basis where the relationship may give rise to a conflict of interest or a perceived conflict of interest. The prohibited transactions include trades in securities in which a responsible person or an associate of a responsible person may have an interest or over which they may have influence or control.

Disclosure when responsible person is partner, director or officer of issuer

Subsection 13.5(2)(a) prohibits a registered adviser from purchasing securities of an issuer in which a responsible person or an associate of a responsible person is a partner, officer or director for a client's managed account. The prohibition applies unless the conflict is disclosed to the client and the client's written consent is obtained prior to the purchase.

If the client is an investment fund, the disclosure should be provided to, and the consent obtained from, each security holder of the investment fund in order for it to be meaningful. This disclosure may be provided in the offering memorandum that is provided to security holders. Like all disclosure about conflicts, it should be prominent, specific, clear and meaningful to the client. Consent may be obtained in the investment management agreement signed by the clients of the adviser that are also security holders of the investment fund.

This approach may not be practical for prospectus qualified mutual funds. Investment fund managers and advisers of these funds should also consider the specific exemption from the prohibition under section 6.2 of National Instrument 81-107 Independent Review Committee for Investment Funds (NI 81-107) for prospectus-qualified investment funds.

Restrictions on trades with certain investment portfolios

Subsection 13.5(2)(b) prohibits certain trades, including, for example, those between the managed account of a client and the managed account of:

• a spouse of the adviser

• a trust for which a responsible person is the trustee, or

• a corporation in which a responsible person beneficially owns 10% or more of the voting securities

It also prohibits inter-fund trades. An inter-fund trade occurs when the adviser for an investment fund knowingly directs a trade in portfolio securities to another investment fund that it acts for or instructs the dealer to execute the trade with the other investment fund. Investment fund managers and their advisers should also consider the exemption from the prohibition that exists for inter-fund trades by public investment funds under section 6.1 of NI 81-107.

Section 13.5(2)(b) is not intended to prohibit a responsible person from purchasing units in the investment fund itself, nor is it intended to prohibit one investment fund from purchasing units of another fund in situations where they have the same adviser.

In instances where an IIROC dealer, who is also an adviser to a managed account, trades between its inventory account and the managed account, the dealer is expected to have policies and procedures that sufficiently mitigate the conflicts of interest inherent in such transactions. Generally, we expect these policies and procedures to ensure that:

• the trades achieve best execution as referenced in National Instrument 23-101 Trading Rules, while ensuring that the trades are consistent with the objectives of the managed account

• reasonable steps are taken to access information, including marketplace quotations or quotes provided by arms-length parties, to ensure that the trade is executed at a fair price

• there is appropriate oversight and a compliance mechanism to monitor this trading activity in order to ensure that it complies with applicable regulatory requirements, including the requirements referred to above.

13.6 Disclosure when recommending related or connected securities

Section 13.6 restricts the ability of a registered firm to recommend a trade in a security of a related or connected issuer. The restrictions apply to recommendations made in any medium of communication. This includes recommendations in newsletters, articles in general circulation newspapers or magazines, websites, e-mail, Internet chat rooms, bulletin boards, television and radio.

It does not apply to oral recommendations made by registered individuals to their clients. These recommendations are subject to the requirements of section 13.4.

Division 3 Referral arrangements

Division 3 sets out the requirements for permitted referral arrangements. Regulators want to ensure that under any referral arrangements:

• individuals and firms that engage in registerable activities are appropriately registered

• the roles and responsibilities of the parties to the written agreement are clear, including responsibility for compliance with securities legislation, and

• clients are provided with disclosure about the referral arrangement to help them evaluate the referral arrangement and the extent of any conflicts of interest

Registered firms have a responsibility to monitor and supervise all of their referral arrangements to ensure that they comply with the requirements of NI 31-103 and other applicable securities laws and continue to comply for so long as the arrangement remains in place.

Obligations to clients

A client who is referred to an individual or firm becomes the client of that individual or firm for the purposes of the services provided under the referral arrangement.

The registrant receiving a referral must meet all of its obligations as a registrant toward its referred clients, including know your client and suitability determinations.

Registrants involved in referral arrangements should manage any related conflicts of interest in accordance with the applicable provisions of Part 13 Dealing with clients - individuals and firms. For example, if the registered firm is not satisfied that the referral fee is reasonable, it should assess whether an unreasonably high fee may create a conflict that could motivate its representatives to act contrary to their duties toward their clients.

13.7 Definitions -- referral arrangements

Section 13.7 defines "referral arrangement" in broad terms. Referral arrangement means an arrangement in which a registrant agrees to pay or receive a referral fee. The definition is not limited to referrals for providing investment products, financial services or services requiring registration. It also includes receiving a referral fee for providing a client name and contact information to an individual or firm. "Referral fee" is also broadly defined. It includes sharing or splitting any commission resulting from the purchase or sale of a security.

In situations where there is no expectation of reward or compensation, we would not consider the receipt of an unexpected gift of appreciation to fall within the scope of a referral arrangement. One of the key elements of the referral arrangement is that the registrant agrees to pay or receive a referral fee for the referral of a client. This agreement or understanding is absent in the case of unexpected gifts.

13.8 Permitted referral arrangements

Under section 13.8, parties to a referral arrangement are required to set out the terms of the arrangement in a written agreement. This is intended to ensure that each party's roles and responsibilities are made clear. This includes obligations for registered firms involved in referral arrangements to keep records of referral fees. Payments do not necessarily have to go through a registered firm, but a record of all payments related to a referral arrangement must be kept.

We expect referral agreements to include:

• the roles and responsibilities of each party

• limitations on any party that is not a registrant (to ensure that it is not engaging in any activities requiring registration)

• the disclosure to be provided to referred clients, and

• who provides the disclosure to referred clients

If the individual or firm receiving the referral is a registrant, they are responsible for:

• carrying out all activity requiring registration that results from the referral arrangement, and

• communicating with referred clients

Registered firms are required to be parties to referral agreements. This ensures that they are aware of these arrangements so they can adequately supervise their representatives and monitor compliance with the agreements. This does not preclude the individual registrant from also being a party to the agreement.

A party to a referral arrangement may need to be registered depending on the activities that the party carries out. Registrants cannot use a referral arrangement to assign, contract out of or otherwise avoid their regulatory obligations.

13.9 Verifying the qualifications of the person or company receiving the referral

Section 13.9 requires the registrant making a referral to satisfy itself that the party receiving the referral is appropriately qualified to perform the services, and if applicable, is appropriately registered. The registrant is responsible for determining the steps that are appropriate in the particular circumstances. For example, this may include an assessment of the types of clients that the referred services would be appropriate for.

13.10 Disclosing referral arrangements to clients

The disclosure of information to clients required under section 13.10 is intended to help clients make an informed decision about the referral arrangement and to assess any conflicts of interest. The disclosure should be provided to clients before or at the time the referred services are provided. A registered firm, and any registered individuals who are directly participating in the referral arrangement, should take reasonable steps to ensure that clients understand:

• which entity they are dealing with

• what they can expect that entity to provide to them

• the registrant's key responsibilities to them

• the limitations of the registrant's registration category

• any relevant terms and conditions imposed on the registrant's registration

• the extent of the referrer's financial interest in the referral arrangement, and

• the nature of any potential or actual conflict of interest that may arise from the referral arrangement

Division 4 Loans and margin

13.12 Restriction on lending to clients

The purpose of section 13.12 is intended to limit the financial exposure of a registered firm. To the extent that products sold to clients are structured in a way that would result in the registrant becoming a lender to the clients, including the registrant extending margin to the client, we would consider the registrant to not be in compliance with section 13.12.

Section 13.12 prohibits registrants from lending money, extending credit or providing margin to clients as we consider that this activity creates a conflict of interest which cannot be easily managed.

We note that SROs are exempt from section 13.12 as they have their own rules or prohibitions on lending, extending credit and providing margin to clients. Direct lending to clients (margin) is reserved for IIROC members. The MFDA has its own rules prohibiting margining and, except in specific limited circumstances, lending.

Division 5 Complaints

Registered firms in Québec must comply with sections 168.1.1 to 168.1.3 of the Québec Securities Act, which has provided a substantially similar regime since 2002. The guidance in Division 5 of this Companion Policy applies to firms registered in any jurisdiction, including Québec.

13.15 Handling complaints

General duty to document and respond to complaints

Section 13.15 requires registered firms to document complaints, and to effectively and fairly respond to them. We are of the view that registered firms should document and respond to all complaints received from a client, a former client or a prospective client who has dealt with the registered firm (complainant).

Firms are reminded that they are required to maintain records which demonstrate compliance with complaint handling requirements under subsection 11.5(2)(m).

Complaint handling policies

An effective complaint system should deal with all formal and informal complaints or disputes in a timely and fair manner. To achieve the objective of handling complaints fairly, the firm's complaint system should include standards allowing for objective factual investigation and analysis of the matters specific to the complaint.

We take the view that registered firms should take a balanced approach to the gathering of facts that objectively considers the interests of

• the complainant

• the registered representative, and

• the firm

Registered firms should not limit their consideration and handling of complaints to those relating to possible violations of securities legislation.

Complaint monitoring

The firm's complaint handling policy should provide for specific procedures for reporting the complaints to superiors, in order to allow the detection of frequent and repetitive complaints made with respect to the same matter which may, on a cumulative basis, indicate a serious problem. Firms should take appropriate measures to deal with such problems as they arise.

Responding to complaints

Types of complaints

All complaints relating to one of the following matters should be responded to by the firm by providing an initial and substantive response, both in writing and within a reasonable time:

• a trading or advising activity

• a breach of client confidentiality

• theft, fraud, misappropriation or forgery

• misrepresentation

• an undisclosed or prohibited conflict of interest, or

• personal financial dealings with a client

Firms may determine that a complaint relating to matters other than the matters listed above is nevertheless of a sufficiently serious nature to be responded to in the manner described below. This determination should be made, in all cases, by considering if an investor, acting reasonably, would expect a written response to their complaint.

When complaints are not made in writing

We would not expect that complaints relating to matters other than those listed above, when made verbally and when not otherwise considered serious based on an investor's reasonable expectation, would need to be responded to in writing. However, we do expect that verbal complaints be given as much attention as written complaints. If a complaint is made verbally and is not clearly expressed, the firm may request the complainant to put the complaint in writing and we expect firms to offer reasonable assistance to do so.

Firms are entitled to expect the complainant to put unclear verbal issues into written format in order to try to resolve confusion about the nature of the issue. If the verbal complaint is clearly frivolous, we do not expect firms to offer assistance to put the complaint in writing. The firm may nonetheless ask the complainant to put the complaint in writing on his or her own.

Timeline for responding to complaints

Firms should

• promptly send an initial written response to a complainant: we consider that an initial response should be provided to the complainant within five business days of receipt of the complaint

• provide a substantive response to all complaints relating to the matters listed under "Types of complaints" above, indicating the firm's decision on the complaint

We encourage firms to resolve complaints relating to the matters listed above within 90 days.

13.16 Dispute resolution service

A registered firm must ensure that the complainant is aware of the dispute resolution or mediation services that are available to them and that the firm will pay for the services. Registered firms should know all applicable mechanisms and processes for dealing with different types of complaints, including those prescribed by the applicable SRO.

In Québec, registrants must inform each complainant, in writing and without delay, that if the complainant is dissatisfied with how the complaint is handled or with the outcome, they may request the registrant to forward a copy of the complaint file to the Autorité des marchés financiers. The registrant must forward a copy of the complaint file to the Autorité des marchés financiers, which will examine the complaint. The Autorité des marchés financiers may act as a mediator if it considers it appropriate to do so and the parties agree.

Registrants who do business in other sectors

Some registrants are also registered or licensed to do business in other sectors, such as insurance. These registrants should inform their clients of the complaint mechanisms for each sector in which they do business and how to use them.

Part 14 Handling client accounts -- firms

Division 2 Disclosure to clients

Registrants should ensure that clients understand who they are dealing with. They should carry on all registerable activities in their full legal or registered trade name. Contracts, confirmation and account statements, among other documents, should contain the registrant's full legal name.

14.2 Relationship disclosure information

Content of relationship disclosure information

There is no prescribed form for the relationship disclosure information required under section 14.2. A registered firm may provide this information in a single document or in separate documents, which together give the client the prescribed information.

Disclosure of costs

Under subsection 14.2(2)(g), registered firms must provide clients with a description of the costs they will pay in making, holding and selling investments. We expect this description to include all costs a client may pay during the course of holding a particular investment. For example, for a mutual fund, the description should briefly explain each of the following and how they may affect the investment:

• the management expense ratio

• the sales charge options available to the client

• the trailing commission

• any short-term trading fees

• any switch or change fees

Permitted clients

Under subsection 14.2(6), registrants do not have to provide relationship disclosure information to permitted clients if:

• the permitted client has waived the requirements in writing, and

• the registrant does not act as an adviser for a managed account of the permitted client

Promoting client participation

Registered firms should help their clients understand the registrant-client relationship. They should encourage clients to actively participate in the relationship and provide them with clear, relevant and timely information and communications.

In particular, registered firms should encourage clients to:

• Keep the firm up to date. Clients should provide full and accurate information to the firm and the registered individuals acting for the firm. Clients should promptly inform the firm of any change to information that could reasonably result in a change to the types of investments appropriate for them, such as a change to their income, investment objectives, risk tolerance, time horizon or net worth.

• Be informed. Clients should understand the potential risks and returns on investments. They should carefully review sales literature provided by the firm. Where appropriate, clients should consult professionals, such as a lawyer or an accountant, for legal or tax advice.

• Ask questions. Clients should ask questions and request information from the firm to resolve questions about their account, transactions or investments, or their relationship with the firm or a registered individual acting for the firm.

• Stay on top of their investments. Clients should pay for securities purchases by the settlement date. They should review all account documentation provided by the firm and regularly review portfolio holdings and performance.

14.4 When the firm has a relationship with a financial institution

As part of their duty to clients, registrants who have a relationship with a financial institution should ensure that their clients understand which legal entity they are dealing with. In particular, clients may be confused if more than one financial services firm is carrying on business in the same location. Registrants may differentiate themselves through various methods, including signage and disclosure.

Division 3 Client assets

14.6 Holding client assets in trust

Section 14.6 requires a registered firm to segregate client assets and hold them in trust. We consider it prudent for registrants who are not members of an SRO to hold client assets in client name only. This is because the capital requirements for non-SRO members are not designed to reflect the added risk of holding client assets in nominee name.

Division 4 Client accounts

14.10 Allocating investment opportunities fairly

If the adviser allocates investment opportunities among its clients, the firm's fairness policy should, at a minimum, indicate the method used to allocate the following:

• price and commission among client orders when trades are bunched or blocked

• block trades and initial public offerings among client accounts

• block trades and initial public offerings among client orders that are partially filled, such as on a pro-rata basis

The fairness policy should also address any other situation where investment opportunities must be allocated.

Division 5 Account activity reporting

Each trade should be reported in the currency in which it was executed. If a trade is executed in a foreign currency through a Canadian account, the exchange rate should be reported to the client.

14.12 Content and delivery of trade confirmation

Section 14.12 requires registered dealers to deliver trade confirmations. A dealer may enter into an outsourcing arrangement for the sending of trade confirmations to its clients. Like all outsourcing arrangements, the registrant is ultimately responsible for the function and must supervise the service provider. See Part 11 of this Companion Policy for more guidance on outsourcing.

14.14 Account statements

Section 14.14 requires registered dealers and advisers to deliver statements to clients at least once every three months. There is no prescribed form for these statements but they must contain the information in subsections 14.14(4) and (5). The types of transactions that must be disclosed in an account statement include any purchase, sale or transfer of securities, dividend or interest payment received or reinvested, any fee or charge, and any other account activity.

We expect all dealers and advisers to provide client account statements. For example, an exempt market dealer should provide an account statement that contains the information prescribed for all transactions the exempt market dealer has entered into or arranged on a client's behalf.

The requirement to produce and deliver an account statement may be outsourced. Portfolio managers frequently enter into outsourcing arrangements for the production and delivery of account statements. Third-party pricing providers may also be used to value securities for the purpose of account statements. Like all outsourcing arrangements, the registrant is ultimately responsible for the function and must supervise the service provider. See Part 11 of this Companion Policy for more guidance on outsourcing.

 

Appendix A

Contact information

Jurisdiction
E-mail
Fax
Address
 
Alberta
registration@asc.ca
(403) 297-4113
Alberta Securities Commission,
Suite 600, 250-5th St. SW
Calgary, AB T2P 0R4
Attention: Registration
 
British Columbia
registration@bcsc.bc.ca
(604) 899-6506
British Columbia Securities Commission
P.O. Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, BC V7Y 1L2
Attention: Registration
 
Manitoba
registrationmsc@gov.mb.ca
(204) 945-0330
The Manitoba Securities Commission
500-400 St. Mary Avenue
Winnipeg, MB R3C 4K5
Attention: Registrations
 
New Brunswick
nrs@nbsc-cvmnb.ca
(506) 658-3059
New Brunswick Securities Commission
Suite 300, 85 Charlotte Street
Saint John, NB E2L 2J2
Attention: Registration Officer
 
Newfoundland & Labrador
scon@gov.nl.ca
(709) 729-6187
Financial Services Regulation Division
Department of Government Services
Government of Newfoundland and Labrador
P.O. Box 8700, 2nd Floor, West Block
Confederation Building
St. John's, NL A1B 4J6
Attention: Registration Section
 
Northwest Territories
SecuritiesRegistry@gov.nt.ca
(867) 873-0243
Government of the Northwest Territories
P.O. Box 1320
Yellowknife, NWT X1A 2L9
Attention: Deputy Superintendent of Securities
 
Nova Scotia
nrs@gov.ns.ca
(902) 424-4625
Nova Scotia Securities Commission
2nd Floor, Joseph Howe Building
1690 Hollis Street
P.O. Box 458
Halifax, NS B3J 2P8
Attention: Deputy Director, Capital Markets
 
Nunavut
CorporateRegistrations@gov.nu.ca
(867) 975-6590 (Faxing to NU is unreliable. The preferred method is e-mail.)
Legal Registries Division
Department of Justice
Government of Nunavut
P.O. Box 1000 Station 570
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar
 
Ontario
registration@osc.gov.on.ca
(416) 593-8283
Ontario Securities Commission
Suite 1903, Box 55
20 Queen Street West
Toronto, ON M5H 3S8
Attention: Compliance and Registrant Regulation
 
Prince Edward Island
ccis@gov.pe.ca
(902) 368-6288
Consumer and Corporate Services Division,
Office of the Attorney General
P.O. Box 2000, 95 Rochford Street
Charlottetown, PE C1A 7N8
Attention: Superintendent of Securities
 
Québec
inscription@lautorite.qc.ca
(514) 873-3090
Autorité des marchés financiers
Service de l'encadrement des intermédiaires
800 square Victoria, 22e étage
C.P 246, Tour de la Bourse
Montréal (Québec) H4Z 1G3
 
Saskatchewan
registrationsfsc@gov.sk.ca
(306) 787-5899
Saskatchewan Financial Services Commission
Suite 601
1919 Saskatchewan Drive
Regina, SK S4P 4H2
Attention: Registration
 
Yukon
corporateaffairs@gov.yk.ca
(867) 393-6251
Department of Community Services Yukon
Yukon Securities Office
P.O. Box 2703 C-6
Whitehorse, YT Y1A 2C6
Attention: Superintendent of Securities

 

Appendix B

Terms not defined in NI 31-103 or this Companion Policy

Terms defined in National Instrument 14-101 Definitions:

• adviser registration requirement

• Canadian securities regulatory authority

• dealer registration requirement

• foreign jurisdiction

• jurisdiction or jurisdiction of Canada

• local jurisdiction

• investment fund manager registration requirement

• prospectus requirement

• registration requirement

• regulator

• securities directions

• securities legislation

• securities regulatory authority

• SRO

• underwriter registration requirement

Terms defined in National Instrument 45-106 Prospectus and Registration Exemptions:

• accredited investor

• eligibility adviser

• financial assets

Terms defined in National Instrument 81-102 Mutual Funds:

• money market fund

Terms defined in the Securities Act of most jurisdictions:

• adviser

• associate

• company

• control person

• dealer

• director

• distribution

• exchange contract (BC, AB, SK and NB only)

• insider

• individual

• investment fund

• investment fund manager

• issuer

• mutual fund

• officer

• person

• promoter

• records

• registrant

• reporting issuer

• security

• trade

• underwriter

 

Appendix C

Proficiency requirements for individuals acting on behalf of a registered firm

The tables in this Appendix set out the education and experience requirements, by firm registration category, for individuals who are applying for registration under securities legislation.

An individual must not perform an activity that requires registration unless the individual has the education, training and experience that a reasonable person would consider necessary to perform the activity competently, including, in the case of registered representatives, understanding the structure, features and risks of each security the individual recommends.

CCOs must also not perform an activity set out in section 5.2 unless they have the education, training and experience that a reasonable person would consider necessary to perform the activity competently.

BMP: Branch Manager Proficiency Exam

CIM: Canadian Investment Manager designation

 

CA: Chartered Accountant

CSC: Canadian Securities Course Exam

 

CCO: Chief Compliance Officer

EMP: Exempt Market Products Exam

 

CCOQ: Chief Compliance Officers Qualifying Exam

IFIC: Investment Funds in Canada Course

 

CFA: CFA Charter

MFDC: Mutual Funds Dealer Compliance Exam

 

CGA: Certified General Accountant Exam/Partners, Directors

PDO: Officers', Partners' and Directors' and Senior Officers Course Exam

 

CMA: Certified Management Accountant

SRP: Sales Representative Proficiency Exam

 

CIF: Canadian Investment Funds Course Exam

 

Investment dealer

 

Dealing representative

CCO

 

Proficiency requirements set by IIROC

Proficiency requirements set by IIROC

 

Mutual fund dealer

 

Dealing representative

CCO

 

One of these five options:

One of these two options:

 

1.

CIF

1.

CIF, CSC or IFIC; and PDO, MFDC or CCOQ

2.

CSC

2.

CCO requirements -- portfolio manager or exempt from these under section 16.9(2)

3.

IFIC

4.

CFA Charter and 12 months of relevant securities industries experience in the 36-months before applying for registration

5.

Advising representative requirements -- portfolio manager or exempt from these under section 16.10(1)

 

Exempt market dealer

 

Dealing representative

CCO

 

One of these four options:

One of these two options:

 

1.

CSC

1.

PDO or CCOQ and EMP or CSC

2.

EMP

2.

CCO requirements -- portfolio manager or exempt from these under section 16.9(2)

3.

CFA Charter and 12 months of relevant securities industries experience in the 36-months before applying for registration

4.

Advising representative requirements -- portfolio manager or exempt from these under section 16.10(1)

 

Scholarship plan dealer

 

Dealing representative

CCO

 

SRP

SRP, BMP, and PDO or CCOQ

 

Restricted dealer

 

Dealing representative

CCO

 

Regulator to determine on a case-by-case basis

Regulator to determine on a case-by-case basis

 

Portfolio manager

 

Advising representative

Associate advising representative

CCO

 

One of these two options:

One of these two options:

One of these three options:

 

1.

CFA and 12 months of relevant investment management experience in the 36-month period before applying for registration

1.

Level 1 of the CFA and 24 months of relevant investment management experience

1.

CSC except if the individual has the CFA or CIM designation, PDO or CCOQ, and CFA or a professional designation as a lawyer, CA, CGA, CMA, notary in Quebec or the equivalent in a foreign jurisdiction, and:

 

2.

CIM and 48 months of relevant investment management experience (12 months gained in the 36-month period before applying for registration)

2.

CIM and 24 months of relevant investment management experience

 

36 months of relevant securities experience working at an investment dealer, registered adviser or investment fund manager, or

36 months providing professional services to the securities industry and 12 months working at a registered dealer, registered adviser or investment fund manager, for a total of 48 months

 

2.

CSC except if the individual has the CFA or CIM designation, PDO or CCOQ and five years working at:

 

an investment dealer or a registered adviser (including 36 months in a compliance capacity), or

a Canadian financial institution in a compliance capacity relating to portfolio management and 12 months at a registered dealer or registered adviser, for a total of six years

 

3.

PDO or CCOQ and advising representative requirements -- portfolio manager

 

Restricted portfolio manager

 

Advising representative

Associate advising representative

CCO

 

Regulator to determine on case-by-case basis

Regulator to determine on case-by-case basis

Regulator to determine on case-by-case basis

 

Investment fund manager

 

CCO

 

One of these three options:

 

1.

CSC except if the individual has the CFA or CIM designation, PDO or CCOQ, and CFA or a professional designation as a lawyer, CA, CGA, CMA, notary in Quebec or the equivalent in a foreign jurisdiction, and:

 

36 months of relevant securities experience working at a registered dealer, registered adviser or investment fund manager, or

 

36 months providing professional services in the securities industry and 12 months working in a relevant capacity at an investment fund manager, for a total of 48 months

 

2.

CIF, CSC or IFIC; PDO or CCOQ and five years of relevant securities experience working at a registered dealer, registered adviser or an investment fund manager (including 36 months in a compliance capacity)

 

3.

CCO requirements for portfolio manager or exempt from these requirements under section 16.9(2)

 

National Instrument 33-109 Registration Information

NATIONAL INSTRUMENT 33-109

REGISTRATION INFORMATION

PART 1 -- DEFINITIONS AND INTERPRETATION

1.1 Definitions -- In this Instrument

"cessation date" means the first day on which an individual ceased to have authority to act as a registered individual on behalf of their sponsoring firm or ceased to be a permitted individual of their sponsoring firm, because of the end of, or a change in, the individual's employment, partnership, or agency relationship with the firm;

"firm" means a person or company that is registered, or is seeking registration, as a dealer, adviser or investment fund manager;

"Form 33-109F1" means Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals;

"Form 33-109F2" means Form 33-109F2 Change or Surrender of Individual Categories;

"Form 33-109F3" means Form 33-109F3 Business Locations other than Head Office;

"Form 33-109F4" means Form 33-109F4 Registration of Individuals and Review of Permitted Individuals;

"Form 33-109F5" means Form 33-109F5 Change of Registration Information;

"Form 33-109F6" means Form 33-109F6 Firm Registration;

"Form 33-109F7" means Form 33-109F7 Reinstatement of Registered Individuals and Permitted Individuals;

"former sponsoring firm" means the registered firm for which an individual most recently acted as a registered individual or permitted individual;

"NRD submission number" means the unique number generated by NRD to identify each NRD submission;

"permitted individual" means an individual who is

(a) a director, chief executive officer, chief financial officer, or chief operating officer of a firm, or who performs the functional equivalent of any of those positions, or

(b) an individual who has beneficial ownership of, or direct or indirect control or direction over, 10 percent or more of the voting securities of a firm;

"principal jurisdiction" means,

(a) for a firm, whose head office is in Canada, the jurisdiction of Canada in which the firm's head office is located,

(b) for an individual whose working office is in Canada, the jurisdiction of Canada in which the individual's working office is located,

(c) for a firm whose head office is outside Canada, the jurisdiction of the firm's principal regulator, as identified by the firm on its most recently submitted Form 33-109F5 or Form 33-109F6, and

(d) for an individual whose working office is outside Canada, the principal jurisdiction of the individual's sponsoring firm;

"principal regulator" means, for a person or company, the securities regulatory authority or regulator of the person or company's principal jurisdiction;

"registered firm" means a registered dealer, registered adviser or registered investment fund manager;

"registered individual" means an individual who is registered under securities legislation to do any of the following on behalf of a registered firm:

(a) act as a dealer, underwriter or adviser;

(b) act as a chief compliance officer;

(c) act as an ultimate designated person;

"sponsoring firm" means,

(a) for a registered individual, the registered firm on whose behalf the individual acts,

(b) for an individual applying for registration, the firm on whose behalf the individual will act if the individual's application is approved,

(c) for a permitted individual of a registered firm, the registered firm, and

(d) for a permitted individual of a firm that is applying for registration, the applicant firm.

1.2 Interpretation -- Terms used in this Instrument and that are defined in National Instrument 31-102 National Registration Database have the same meanings as in National Instrument 31-102 National Registration Database.

PART 2 -- APPLICATION FOR REGISTRATION AND REVIEW OF PERMITTED INDIVIDUALS

2.1 Firm Registration -- A firm that applies for registration as a dealer, adviser or investment fund manager must submit each of the following to the regulator:

(a) a completed Form 33-109F6;

(b) for each business location of the applicant in the local jurisdiction other than the applicant's head office, a completed Form 33-109F3 in accordance with National Instrument 31-102 National Registration Database.

2.2 Individual Registration

(1) Subject to subsection (2) and sections 2.4 and 2.6, an individual who applies for registration under securities legislation must submit a completed Form 33-109F4 to the regulator in accordance with National Instrument 31-102 National Registration Database.

(2) A permitted individual of a registered firm who applies to become a registered individual with the firm must submit a completed Form 33-109F2 to the regulator in accordance with National Instrument 31-102 National Registration Database.

2.3 Reinstatement

(1) An individual who applies for reinstatement of registration under securities legislation must submit a completed Form 33-109F4 to the regulator in accordance with National Instrument 31-102 National Registration Database, unless the individual submits a completed Form 33-109F7 in accordance with subsection (2).

(2) The registration of an individual suspended under section 6.1 [If an individual ceases to have authority to act for firm] of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations is reinstated on the date the individual submits a completed Form 33-109F7 to the regulator in accordance with National Instrument 31-102 National Registration Database if all of the following apply:

(a) the Form 33-109F7 is submitted on or before the 90th day after the cessation date;

(b) the individual's employment, partnership or agency relationship with the former sponsoring firm did not end because the individual was asked by the firm to resign, resigned voluntarily or was dismissed, following an allegation against the individual of any of the following:

(i) criminal activity;

(ii) a breach of securities legislation;

(iii) a breach of a rule of an SRO;

(c) after the cessation date there have been no changes to the information previously submitted in respect of any of the following items of the individual's Form 33-109F4:

(i) item 13 [Regulatory disclosure];

(ii) item 14 [Criminal disclosure];

(iii) item 15 [Civil disclosure];

(iv) item 16 [Financial disclosure];

(d) the individual is seeking reinstatement with a sponsoring firm in the same category of registration in which the individual was registered on the cessation date;

(e) the new sponsoring firm is registered in the same category of registration in which the individual's former sponsoring firm was registered.

2.4 Application to Change or Surrender Individual Registration Categories -- A registered individual who applies for registration in an additional category, or to surrender a registration category, must make the application by submitting a completed Form 33-109F2 to the regulator in accordance with National Instrument 31-102 National Registration Database.

2.5 Permitted Individuals

(1) A permitted individual must submit a completed Form 33-109F4 to the regulator, in accordance with National Instrument 31-102 National Registration Database, no more than 10 days after becoming a permitted individual, unless the individual submits a Form 33-109F7 in accordance with subsection (2).

(2) An individual who has ceased to be a permitted individual of a former sponsoring firm and becomes a permitted individual of a new sponsoring firm may submit a completed Form 33-109F7 to the regulator if all of the following apply:

(a) the Form 33-109F7 is submitted in accordance with National Instrument 31-102 National Registration Database

(i) no more than 10 days after becoming a permitted individual of the new sponsoring firm, and

(ii) no more than 90 days after the cessation date;

(b) the individual holds the same permitted individual status with the new sponsoring firm that they held with the former sponsoring firm;

(c) the conditions described in paragraphs (b) and (c) of subsection 2.3(2) are met.

2.6 Commodity Futures Act Registrants

(1) In Manitoba and Ontario, despite subsection 2.1(b), if a firm applies for registration under section 2.1 and is registered under the Commodity Futures Act, the applicant is not required to submit a completed Form 33-109F3 under section 3.2 for any business location of the applicant that is recorded on NRD.

(2) In Manitoba and Ontario, despite subsection 2.2(1), if an individual applies for registration under securities legislation and is recorded on NRD with his or her sponsoring firm as registered under the Commodity Futures Act, the individual must make the application by submitting a completed Form 33-109F2 to the regulator in accordance with National Instrument 31-102 National Registration Database.

PART 3 -- CHANGES TO REGISTERED FIRM INFORMATION

3.1 Notice of Change to a Firm's Information

(1) Subject to subsections (3) or (4), a registered firm must notify the regulator of a change to any information previously submitted in Form 33-109F6 or under this subsection, as follows:

(a) for a change previously submitted in relation to part 3 of Form 33-109F6, within 30 days of the change;

(b) for a change previously submitted in relation to any other part of Form 33-109F6, within 10 days of the change.

(2) A notice of change referred to in subsection (1) must be made by submitting a completed Form 33-109F5.

(3) A notice of change is not required under subsection (1) if the change relates to any of the following:

(a) a business location other than the head office of the firm if the firm submits a completed Form 33-109F3 under section 3.2;

(b) a termination, or a change, of a registered firm's employment, partnership or agency relationship with an officer, partner or director of the registered firm if the firm submits a completed Form 33-109F1 under subsection 4.2(1);

(c) the addition of an officer, partner, or director to the registered firm if that individual submits either of the following:

(i) a completed Form 33-109F4 under subsection 2.2(1) or 2.5(1);

(ii) a completed Form 33-109F7 under subsection 2.3(2) or 2.5(2);

(d) the information in the supporting documents referred to in any of the following items of Form 33-109F6:

(i) item 3.3 [Business documents];

(ii) item 5.1 [Calculation of excess working capital];

(iii) item 5.7 [Directors' resolution for insurance];

(iv) item 5.13 [Audited financial statements];

(v) item 5.14 [Letter of direction to auditors].

(4) A person or company that submitted a completed Schedule B [Submission to Jurisdiction and Appointment of Agent for Service] to Form 33-109F6 must notify the regulator of a change to the information previously submitted in item 3 [Name of agent for service of process] or item 4 [Address for service of process on the agent for service] of that schedule, by submitting a completed Schedule B no more than 10 days after the change;

(5) Subsection (4) does not apply to a person or company after they have ceased to be registered for a period of 6 years or more.

(6) For the purpose of subsections (2) and (4), the person or company may give the notice by submitting it to the principal regulator.

3.2 Changes to Business Locations -- A registered firm must notify the regulator of the opening of a business location, other than a new head office, or of a change to any information previously submitted in Form 33-109F3, by submitting a completed Form 33-109F3 to the regulator in accordance with National Instrument 31-102 National Registration Database, within 10 days of the opening of the business location or change.

PART 4 -- CHANGES TO REGISTERED INDIVIDUAL AND PERMITTED INDIVIDUAL INFORMATION

4.1 Notice of Change to an Individual's Information

(1) Subject to subsection (2), a registered individual or permitted individual must notify the regulator of a change to any information previously submitted in respect of the individual's Form 33-109F4 as follows:

(a) for a change of information previously submitted in items 4 [Citizenship] and 11 [Previous employment] of Form 33-109F4, within 30 days of the change;

(b) for a change of information previously submitted in any other items of Form 33-109F4, within 10 days of the change.

(2) A notice of change is not required under subsection (1) if the change relates to information previously submitted in item 3 [Personal information] of Form 33-109F4.

(3) A notice of change under subsection (1) must be made by submitting a completed Form 33-109F5 to the regulator in accordance with National Instrument 31-102 National Registration Database.

(4) Despite subsection (3), a notice of change referred to in subsection (1) must be made by submitting a completed Form 33-109F2 to the regulator in accordance with National Instrument 31-102 National Registration Database, if the change relates to:

(a) an individual's status as a permitted individual of the sponsoring firm;

(b) the removal or the addition of a category of registration;

(c) the surrender of registration in one or more non-principal jurisdictions.

4.2 Termination of Employment, Partnership or Agency Relationship

(1) A registered firm must notify the regulator of the end of, or a change in, a sponsored individual's employment, partnership, or agency relationship with the firm if the individual ceases to have authority to act on behalf of the firm as a registered individual or permitted individual by submitting a Form 33-109F1 to the regulator in accordance with National Instrument 31-102 National Registration Database with

(a) items 1 through 4 completed, and

(b) item 5 completed unless the reason for termination under item 4 was death of the individual.

(2) A registered firm must submit to the regulator the information required under

(a) subsection (1)(a), within 10 days of the cessation date, and

(b) subsection (1)(b), within 30 days of the cessation date.

(3) A registered firm must, within 10 days of a request from an individual for whom the registered firm was the former sponsoring firm, provide to the individual a copy of the Form 33-109F1 that the registered firm submitted under subsection (1) in respect of that individual.

(4) If a registered firm completed and submitted the information in item 5 of a Form 33-109F1 in respect of an individual who made a request under subsection (3) and that information was not included in the initial copy provided to the individual, the registered firm must provide to that individual a further copy of the completed Form 33-109F1, including the information in item 5, within the later of

(a) 10 days after the request by the individual under subsection (3), and

(b) 10 days after the submission pursuant to subsection (2)(b).

PART 5 -- DUE DILIGENCE AND RECORD-KEEPING

5.1 Sponsoring Firm Obligations

(1) A sponsoring firm must make reasonable efforts to ensure the truth and completeness of information that is submitted in accordance with this Instrument for any individual.

(2) A sponsoring firm must obtain from each individual who is registered to act on behalf of the firm, or who is a permitted individual of the firm, a copy of the Form 33-109F1 most recently submitted by the individual's former sponsoring firm in respect of that individual, if any, within 60 days of the firm becoming the individual's sponsoring firm.

(3) A sponsoring firm must retain all documents used by the firm to satisfy its obligation under subsection (1) as follows:

(a) in the case of a registered individual, for no less than 7 years after the individual ceases to be registered to act on behalf of the firm;

(b) in the case of an individual who applied for registration but whose registration was refused by the regulator, for no less than 7 years after the individual applied for registration; or

(c) in the case of a permitted individual, for no less than 7 years after the individual ceases to be a permitted individual with the firm.

(4) Without limiting subsection (3), if a registered individual, an individual applying for registration, or a permitted individual appoints an agent for service, the sponsoring firm must keep the original Appointment of Agent for Service executed by the individual for the period of time set out in paragraph (3)(b).

(5) A sponsoring firm that retains a document under subsection (3) or (4) in respect of an NRD submission must record the NRD submission number on the first page of the document.

PART 6 -- TRANSITION

6.1 All Registered Firms to File Form 33-109F6 -- September 30, 2010 -- A registered firm that was registered before September 28, 2009 must submit a completed Form 33-109F6 to the regulator on or before September 30, 2010.

6.2 Notice of Change for Firms Registered before September 28, 2009

(1) In this section, "Form 3" means the form that a firm submitted before this Instrument came into force to apply for registration as a dealer, adviser or underwriter in the jurisdiction that, at the time the application was made, would have been the firm's principal jurisdiction under this Instrument.

(2) Subject to subsection (5), a registered firm that was first registered in a jurisdiction of Canada before this Instrument came into force and that has not submitted a completed Form 33-109F6 to the regulator, must notify the regulator of a change to any information previously submitted

(a) in a notice of agent and address for service, by submitting to the regulator a completed Schedule B to Form 33-109F6, no more than 10 days after the change;

(b) in Form 3 or in any notice of change to information in that form submitted to the regulator, as follows:

(i) for a change of information equivalent to the information referred to in part 3 of Form 33-109F6, within 30 days of the change;

(ii) for a change of information equivalent to the information referred to in any other part of Form 33-109F6, within 10 days of the change.

(3) A registered firm referred to in subsection (2) must notify the regulator of a change in its auditor or financial year-end within 10 days of the change.

(4) For the purpose of subsections (2) and (3) the firm may give the notice by submitting it to the principal regulator.

(5) A notice of change is not required under subsection (2) if the change relates to any of the following:

(a) the addition of an officer, partner, or director to the registered firm if that individual

(i) submits a completed Form 33-109F4 under subsection 2.2(1) or 2.5(1), or

(ii) submits a completed Form 33-109F7 under subsection 2.3(2) or 2.5(2);

(b) a termination, or a change, of a registered firm's employment, partnership or agency relationship with an officer, partner or director of the registered firm if the firm submits a completed Form 33-109F1 under subsection 4.2(1);

(c) a business location other than the head office of the firm if the firm submits a completed Form 33-109F3 under section 3.2;

(d) information equivalent to the information referred to in section 3.1(3)(d).

6.3 National Registration Database Transition Period

(1) In this section, "NRD access date" means the first day following September 25, 2009 that an NRD filer has access to NRD to make NRD submissions.

(2) A notice submitted by an NRD filer before September 25, 2009, and not accepted or denied by the regulator by that date, must be resubmitted, as if the time required for the submission had fallen within the period commencing on September 25, 2009 and ending on the day before the NRD access date, in accordance with subsections (3), (4) and (6) as applicable.

(3) Except in the case of a notice referred to in subsection (4), if the time required for making either of the following submissions falls within the period commencing on September 25, 2009 and ending on the day before the NRD access date, the time for making the submission is extended to the 45th day following the NRD access date:

(a) a notice that is required to be submitted in NRD format;

(b) a Form 33-109F4 that is required to be submitted under subsection 2.5(1).

(4) If the time required for making either of the following submissions falls within the period commencing on September 25, 2009 and ending on the day before the NRD access date, the submission must be made other than through the NRD website:

(a) a notice referred to in subsection 4.1(1) if the change relates to previously submitted information about any of the following items of the individual's Form 33-109F4:

(i) item 14 [Criminal disclosure];

(ii) item 15 [Civil disclosure];

(iii) item 16 [Financial disclosure];

(b) a notice of termination referred to in subsection 4.2(1) from a former sponsoring firm, within the time required under subsection 4.2(2), if the individual's employment, partnership or agency relationship with the firm ended because the individual resigned or was dismissed for cause.

(5) From September 28, 2009 to the day before the NRD access date, an individual may submit any of the following to the regulator other than through the NRD website:

(a) Form 33-109F7;

(b) Form 33-109F2;

(c) Form 33-109F4 other than under subsection 2.5(1).

(6) If an NRD filer makes a submission other than through the NRD website under subsection (4) or (5), the NRD filer must resubmit the information in NRD format to the regulator as follows:

(a) for a Form 33-109F7 submitted under paragraph (5)(a),

(i) if the cessation date was on or after September 28, 2009, by submitting a completed Form 33-109F7 no later than 30 days after the NRD access date;

(ii) if the cessation date was before September 28, 2009, by submitting a completed Form 33-109F4 no later than 30 days after the NRD access date;

(b) for any other submission no later than 30 days after the NRD access date.

6.4 Transition -- Reinstatement under Subsections 2.3(2) and 2.5(2)

(1) Despite subsection 2.3(2), from the NRD access date to December 28, 2009 an individual who seeks reinstatement of registration under subsection 2.3(2) must submit a completed Form 33-109F4 to the regulator in accordance with National Instrument 31-102 National Registration Database, if the cessation date occurred before September 28, 2009.

(2) For greater certainty, the registration of an individual who makes a submission under subsection (1) is reinstated in accordance with subsection 2.3(2) only if all of the conditions in paragraphs (a) through (e) of subsection 2.3(2) are met.

(3) Subsection 2.5(2) does not apply to a permitted individual whose cessation date occurred before September 28, 2009.

PART 7 -- EXEMPTION

7.1 Exemption

(1) The regulator or the securities regulatory authority may grant an exemption from 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.

(3) Except in Ontario, an exemption referred to in subsection (1) is granted under the statute referred to in Appendix B of National Instrument 14-101 Definitions, opposite the name of the local jurisdiction.

PART 8 -- REPEAL AND EFFECTIVE DATE

8.1 Repeal -- National Instrument 33-109 Registration Information, which came into force on February 14, 2003, is repealed.

8.2 Effective Date -- This Instrument comes into force on the day National Instrument 31-103 Registration Requirements and Exemptions comes into force.

 

Form 33-109F1 Notice of Termination of Registered Individuals and Permitted Individuals

FORM 33-109F1

NOTICE OF TERMINATION OF REGISTERED INDIVIDUALS

AND PERMITTED INDIVIDUALS

(section 4.2)

GENERAL INSTRUCTIONS

Complete and submit this form to notify the relevant regulator(s) or, in Québec, the securities regulatory authority, or self-regulatory organization (SRO) that a registered individual or permitted individual has left their sponsoring firm or has ceased to act in a registerable capacity or as a permitted individual.

Terms

In this form, "cessation date" (or "effective date of termination") means the first day on which an individual ceased to have authority to act as a registered individual on behalf of their sponsoring firm or ceased to be a permitted individual of their sponsoring firm, because of the end of, or a change in, the individual's employment, partnership, or agency relationship with the firm.

How to submit the form

Submit this form at the National Registration Database (NRD) website in NRD format at www.nrd.ca.

If you are relying on the temporary hardship exemption in section 5.1 of National Instrument 31-102 [National Registration Database], you may submit this form in a format other than NRD format.

When to submit the form

You must submit the responses to Item 1, Item 2, Item 3 and Item 4 within 10 days of the effective date of termination.

If you are required to complete Item 5, you must submit those responses within 30 days of the termination date. If you are submitting the responses to Item 5, in NRD format, after Items 1 to 4 have been submitted at NRD, use the NRD submission type called "Update/Correct Termination Information" to complete Item 5 of this form.

Item 1 Terminating firm

1. Name ____________________

2. NRD number ____________________

Item 2 Terminated individual

1. Name ____________________

2. NRD number ____________________

Item 3 Business location of the terminated individual

1. Address ____________________

2. NRD number ____________________

Item 4 Date and reason for termination

1. Cessation date / Effective date of termination ____________________ (YYYY/MM/DD)

This is the first day that the individual ceased to have authority to act in a registerable capacity on behalf of the firm or ceased to be a permitted individual.

2. Reason for termination / cessation (check one):

Resigned - voluntary
[ ]
 
Resigned - at the firm's request
[ ]
 
Dismissed in good standing
[ ]
 
Dismissed for cause
[ ]
 
Completed temporary employment contract
[ ]
 
Retired
[ ]
 
Deceased
[ ]
 
Other
[ ]

Item 5 Details about the termination

Complete Item 5 except where the individual is deceased. In the space below:

• state the reason(s) for the cessation / termination and

• provide details if the answer to any of the following questions is "Yes".

[For NRD Format only:]

[ ]

This information will be disclosed within 30 days of the effective date of termination

 

[ ]

Not applicable: individual is deceased

Answer the following questions to the best of the firm's knowledge.

In the past 12 months:

Yes

No

 

1.

Was the individual charged with any criminal offence?

[ ]

[ ]

 

2.

Was the individual the subject of any investigation by any securities or financial industry regulator?

[ ]

[ ]

 

3.

Was the individual subject to any significant internal disciplinary measures at the firm or at any affiliate of the firm related to the individual's activity as a registrant?

[ ]

[ ]

 

4.

Were there any written complaints, civil claims and/or arbitration notices filed against the individual or against the firm about the individual's securities-related activities that occurred while the individual was registered or a permitted individual authorized to act on behalf of the firm?

[ ]

[ ]

 

5.

Does the individual have any undischarged financial obligations to clients of the firm?

[ ]

[ ]

 

6.

Has the firm or any affiliate of the firm suffered significant monetary loss or harm to its reputation as a result of the individual's actions?

[ ]

[ ]

 

7.

Did the firm or any affiliate of the firm investigate the individual relating to possible material violations of fiduciary duties, regulatory requirements or the compliance policies and procedures of the firm or any affiliate of the firm? Examples include making unsuitable trades or investment recommendations, stealing or borrowing client money or securities, hiding losses from clients, forging client signatures, money laundering, deliberately making false representations and engaging in undisclosed outside business activity.

[ ]

[ ]

 

8.

Did the individual repeatedly fail to follow compliance policies and procedures of the firm or any affiliate of the firm?

[ ]

[ ]

 

9.

Did the individual engage in discretionary management of client accounts or otherwise engage in registerable activity without appropriate registration or without the firm's authorization?

[ ]

[ ]

Reasons/Details: ________________________________________

Item 6 [repealed]

Item 7 Warning

It is an offence under securities legislation and/or derivatives legislation, including commodity futures legislation to give false or misleading information on this form.

Item 8 Certification

Certification-NRD format:

[ ]

I am making this submission as agent for the firm. By checking this box, I certify that the firm provided me with all of the information on this form.

Certification-Format other than NRD format:

By signing below I certify to the regulator or, in Québec, the securities regulatory authority, in each jurisdiction where I am submitting this form for the firm, either directly or through the principal regulator, that:

• I have read this form and understand the questions, and

• all of the information provided on this form is true and complete.

Name of firm ____________________

Name of authorized signing officer or partner ____________________

Title of authorized signing officer or partner ____________________

Signature of authorized signing officer or partner ____________________

Date signed ____________________ (YYYY/MM/DD)

 

Schedule A

[repealed]

 

Form 33-109F2 Change or Surrender of Individual Categories

FORM 33-109F2

CHANGE OR SURRENDER OF INDIVIDUAL CATEGORIES

(section 2.2(2), 2.4, 2.6(2) or 4.1(4))

GENERAL INSTRUCTIONS

Complete and submit this form to notify the relevant regulator(s) or, in Québec, the securities regulatory authority, or self-regulatory organization (SRO) that a registered individual or permitted individual seeks to add and/or remove individual registration categories or permitted activities.

Terms

In this form, "you", "your" and "individual" mean the registered individual or permitted individual who is seeking to add and/or remove registration categories or permitted activities.

How to submit this form

Submit this form at the National Registration Database (NRD) website in NRD format at www.nrd.ca.

If you are relying on the temporary hardship exemption in section 5.1 of National Instrument 31-102, you may submit this form in a format other than NRD format.

Item 1 Individual

Name of individual ____________________

NRD number of individual ____________________

Item 2 Registration jurisdictions

1. Are you filing this form under the passport system / interface for registration?

Choose "no" if you are registered in:

(a) only one jurisdiction in Canada

(b) more than one jurisdiction in Canada and you are requesting a surrender in a non-principal jurisdiction or jurisdictions, but not in your principal jurisdiction

(c) more than one jurisdiction in Canada and you are requesting a change only in your principal jurisdiction

Yes

[ ]

No

[ ]

2. Check each jurisdiction where you are seeking the change or surrender of individual categories of registration.

[ ]

Alberta

[ ]

British Columbia

[ ]

Manitoba

[ ]

New Brunswick

[ ]

Newfoundland and Labrador

[ ]

Northwest Territories

[ ]

Nova Scotia

[ ]

Nunavut

[ ]

Ontario

[ ]

Prince Edward Island

[ ]

Québec

[ ]

Saskatchewan

[ ]

Yukon

Item 3 Removing categories

What categories are you seeking to remove?

________________________________________

Item 4 Adding categories

1. Categories

What categories are you seeking to add?

________________________________________

2. Professional liability insurance (Québec mutual fund dealers and Québec scholarship plan dealers)

If you are seeking registration as a representative of a mutual fund dealer or of a scholarship plan dealer in Québec, are you covered by your sponsoring firm's professional liability insurance?

Yes

[ ]

No

[ ]

If "No", state:

The name of your insurer ________________________________________

Your policy number ____________________

3. Relevant securities industry experience

If you have not been registered in the last 36 months and you passed the required examination more than 36 months ago, do you consider that you have gained 12 months of relevant securities industry experience during the 36 month period?

Yes

[ ]

No

[ ]

N/A

[ ]

If you are an individual applying for IIROC approval, select "Not Applicable" above.

If "yes", complete Schedule A.

Item 5 Reason for surrender

If you are seeking to remove a category or permitted activity, state the reason for the surrender in the local jurisdiction.

________________________________________

Item 6 Notice of collection and use of personal information

The personal information required under this form is collected on behalf of, and used by, the securities regulatory authorities in the jurisdictions set out in Schedule A to administer and enforce certain provisions of their securities legislation or derivatives legislation or both.

The personal information required under this form is also collected by and used by the SROs set out in Schedule A to administer and enforce their respective by-laws, regulations, rules, rulings and policies.

By submitting this form, the individual consents to the collection by the securities regulatory authorities or applicable SRO of this personal information, and any police records, records from other government or non-governmental regulators or SROs, credit records and employment records about the individual that the securities regulatory authorities or applicable SRO may need to complete their review of the information submitted in this form relating to the individual's continued fitness for registration or approval, if applicable, in accordance with the legal authority of the securities regulatory authorities while the individual is registered with or approved by it. Securities regulatory authorities or SROs may contact government and private bodies or agencies, individuals, corporations and other organizations for information about the individual.

If you have any questions about the collection and use of this information, contact the securities regulatory authorities or applicable SRO in any jurisdiction in which the required information is submitted. See Schedule A for details. In Québec, you can also contact the Commission d'accès à l'information at 1-888-528-7741 or visit its website at www.cai.gouv.qc.ca.

Item 7 Warning

It is an offence under securities legislation and/or derivatives legislation, including commodity futures legislation to give false or misleading information on this form.

Item 8 Certification

Certification-NRD format:

I confirm I have discussed the questions in this form with an officer, branch manager or supervisor of my sponsoring firm. To the best of my knowledge and belief, the officer, branch manager or supervisor was satisfied that I fully understood the questions. I will limit my activities to those permitted by my category of registration.

[ ]

I am making this submission as agent for the individual identified in this form. By checking this box, I certify that the individual provided me with all of the information on this form.

Certification-Format other than NRD format:

By signing below:

1. I certify to the regulator or, in Québec, the securities regulatory authority, in each jurisdiction where I am submitting this form, either directly or through the principal regulator, that:

• I have read this form and understand the questions, and

• all of the information provided on this form is true, and complete.

2. I confirm I have discussed the questions in this form with an officer, branch manager or supervisor of my sponsoring firm. To the best of my knowledge and belief, the officer, branch manager or supervisor was satisfied that I fully understood the questions. I will limit my activities to those permitted by my category of registration.

Signature of individual____________________

Date signed __________ (YYYY/MM/DD)

By signing below, I certify to the regulator or, in Québec, the securities regulatory authority, in each jurisdiction where I am submitting this form for the individual, either directly or through the principal regulator, that:

1. the individual identified in this form will be engaged by the firm as a registered individual, or a non registered individual, and

2. I have, or a branch manager or supervisor or another officer or partner has, discussed the questions set out in this form with the individual. To the best of my knowledge and belief, the individual fully understands the questions.

Name of firm ________________________________________

Name of authorized signing officer or partner ____________________

Title of authorized signing officer or partner ____________________

Signature of authorized signing officer or partner __________

Date signed ____________________ (YYYY/MM/DD)

 

SCHEDULE A

Relevant securities industry experience (Item 4)

Describe your responsibilities in areas relating to the category you are applying for, including the title(s) you have held, as well as start and end dates:

____________________

____________________

____________________

What is the percentage of your time devoted to these activities?

_____ %

Indicate the continuing education activities which you have participated in during the last 36 months and which are relevant to the category of registration you are applying for:

____________________

____________________

____________________

____________________

 

Schedule B

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer,
Winnipeg, MB R3C 4K5
Corporate and Insurance Services Division
Attention: Director of Registrations
P.O. Box 2000
Telephone (204) 945-2548
Charlottetown, PE C1A 7N8
Fax (204) 945-0330
Attention: Deputy Registrar of Securities
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

 

Form 33-109F3 Business Locations other than Head Office

FORM 33-109F3

BUSINESS LOCATIONS OTHER THAN HEAD OFFICE

(section 3.2)

GENERAL INSTRUCTIONS

Complete and submit this form to notify the relevant regulator(s) or, in Québec, the securities regulatory authority, or self-regulatory organization (SRO) that a business location has opened or closed, or information about a business location has changed.

Check one of the following and complete the entire form:

[ ]

Opening this business location

 

[ ]

Closing this business location

 

[ ]

Change to the information previously submitted about this business location. Clearly specify the information that has changed.

How to submit this form

Submit this form at the National Registration Database (NRD) website in NRD format at www.nrd.ca.

If you are relying on the temporary hardship exemption in section 5.1 of National Instrument 31-102, you may complete and submit this form in a format other than NRD format.

Item 1 Type of business location

Branch or Business Location

[ ]

 

Sub-branch

[ ]

Item 2 Supervisor or branch manager

Name of designated supervisor or branch manager ____________________

NRD number of the designated supervisor or branch manager ____________________

Item 3 Business location information

Business address ____________________

Mailing address (if different from business address) ____________________

Telephone number (___) __________

Fax number (___) __________

Item 4 Notice of collection and use of personal information

The personal information required under this form is collected on behalf of, and used by, the securities regulatory authorities in the jurisdictions set out in Schedule A to administer and enforce certain provisions of their securities legislation or derivatives legislation or both.

The personal information required under this form is also collected by and used by the SROs set out in Schedule A to administer and enforce their respective by-laws, regulations, rules, rulings and policies.

By submitting this form, the individual consents to the collection by the securities regulatory authorities or applicable SRO of this personal information, and any police records, records from other government or non-governmental regulators or SROs, credit records and employment records about the individual that the securities regulatory authorities or applicable SRO may need to complete their review of the information submitted in this form relating to the individual's continued fitness for registration or approval, if applicable, in accordance with the legal authority of the securities regulatory authorities while the individual is registered with or approved by it. Securities regulatory authorities or SROs may contact government and private bodies or agencies, individuals, corporations and other organizations for information about the individual.

If you have any questions about the collection and use of this information, contact the securities regulatory authorities or applicable SRO in any jurisdiction in which the required information is submitted. See Schedule A for details. In Québec, you can also contact the Commission d'accès à l'information at 1-888-528-7741 or visit its website at www.cai.gouv.qc.ca.

Item 5 Warning

It is an offence under securities legislation and/or derivatives legislation, including commodity futures legislation to give false or misleading information on this form.

Item 6 Certification

Certification-NRD format:

[ ]

I am making this submission as agent for the firm. By checking this box, I certify that the firm provided me with all of the information on this form.

Certification-Format other than NRD format:

By signing below, I certify to the securities regulator or, in Québec, the securities regulatory authority, in each jurisdiction where I am submitting this form for the firm, either directly or through the principal regulator, that:

• I have read this form and understand the questions, and

• all of the information provided on this form is true, and complete.

Name of firm ____________________

Name of authorized signing officer or partner ____________________

Title of authorized signing officer or partner ____________________

Signature of authorized signing officer or partner ____________________

Date signed __________/ (YYYY/MM/DD)

 

Schedule A

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer,
Winnipeg, MB R3C 4K5
Corporate and Insurance Services Division
Attention: Director of Registrations
P.O. Box 2000
Telephone (204) 945-2548
Charlottetown, PE C1A 7N8
Fax (204) 945-0330
Attention: Deputy Registrar of Securities
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

 

Form 33-109F4 Registration of Individuals and Review of Permitted Individuals

FORM 33-109F4

REGISTRATION OF INDIVIDUALS AND

REVIEW OF PERMITTED INDIVIDUALS

(section 2.2)

GENERAL INSTRUCTIONS

Complete and submit this form to the relevant regulator(s) or in Québec, the securities regulatory authority, or self-regulatory organization (SRO) if an individual is seeking registration in individual categories or is seeking to be reviewed as a permitted individual. You only need to complete and submit one of this form regardless of the number of categories you are seeking to be registered in.

Terms

In this form, "you", "your" and "individual" mean the individual who is seeking registration or the individual who is filing this form as a permitted individual under securities legislation or derivatives legislation or both.

"Sponsoring firm" means the registered firm where you will carry out your duties as a registered or permitted individual.

"Derivatives" means financial instruments, such as futures contracts (including exchange traded contracts), futures options and swaps whose market price, value or payment obligations are derived from, or based on, one or more underlying interests. Derivatives can be in the form of instruments, agreements or securities.

"Major shareholder" and "shareholder" mean a shareholder who, in total, directly or indirectly owns voting securities carrying 10 per cent or more of the votes carried by all outstanding voting securities.

"Approved person" means, in respect of a member (Member) of the Investment Industry Regulatory Organization of Canada (IIROC), an individual who is a partner, director, officer, employee or agent of a Member who is approved by the IIROC or another Canadian SRO to perform any function required under any IIROC or another Canadian SRO By-law, Regulation, or Policy.

Several terms used in this form are defined in the securities legislation of your province or territory. Please refer to those definitions.

How to submit this form

NRD format

Submit this form at the National Registration Database (NRD) website in NRD format at www.nrd.ca. You are only required to submit one form regardless of the number of registration categories you are seeking. If you have any questions, contact the compliance, registration or legal department of the sponsoring firm or a legal adviser with securities regulation experience, or visit the NRD information website at www.nrd-info.ca.

Format, other than NRD format

If you are relying on the temporary hardship exemption in section 5.1 of National Instrument 31-102 National Registration Database, you may submit this form in a format other than NRD format.

If you need more space, use a separate sheet of paper. Clearly identify the Item and question number. Complete and sign the form, and send it to the relevant regulator(s) or, in Québec, the securities regulatory authority, SRO (s) or similar authority. The number of originally signed copies of the form you are required to submit depends on the province or territory, and on the regulator, the securities regulatory authority or SRO.

To avoid delays in processing this form, be sure to answer all of the questions that apply to you. If you have questions, contact the compliance, registration or legal department of the sponsoring firm or a legal adviser with securities regulation experience, or visit the National Registration Database information website at www.nrd-info.ca.

Item 1 Name

1. Legal name

__________
__________
__________
__________
Last name
First name
Second name (N/A [ ])
Third name (N/A [ ])

NRD number (if applicable) ____________________

2. Other personal names

Are you currently, or have you ever been, known by any names other than your full legal name above, for example, nicknames or names due to marriage?

Yes
[ ]
No
[ ]

If "yes", complete Schedule A.

3. Use of other names

Are you currently, or have you ever used, operated under, or carried on business under any name other than the name(s) mentioned above, for example, trade names for sole proprietorships or team names?

Yes
[ ]
No
[ ]

If "yes", complete Schedule A.

Item 2 Residential address

Provide all of your residential addresses, including any foreign residential addresses, for the past 10 years.

1. Current and previous residential addresses

____________________

(number, street, city, province, territory or state, country, postal code)

Telephone number ____________________

Lived at this address since (YYYY/MM) ____________________

If you have lived at this address for less than 10 years, complete Schedule B.

2. Mailing address

[ ]

Check here if your mailing address is the same as your current residential address provided above. Otherwise, complete the following:

____________________

(number, street, city, province, territory or state, country, postal code)

Item 3 Personal information

1. Date of birth ____________________ (YYYY/MM/DD)

2. Place of birth ____________________ (city, province, territory or state, country)

3.
Gender [ ]
Female [ ]
Male [ ]

4. Eye colour ____________________

5. Hair colour ____________________

6. Height __________ in. or __________ cm

7. Weight __________ lbs. or __________ kg

Item 4 Citizenship

1. Citizenship information

What is your country of citizenship?

[ ]
Canada
 
[ ]
Other, specify: ____________________

2. If you are a citizen of a country other than Canada, complete the following for that citizenship.

[ ]
Check here if you do not have a valid passport. Otherwise, provide:

Passport number: ____________________

Date of issue: ____________________ (YYYY/MM/DD)

Place of issue: ____________________ (city, province, territory or state, country)

Item 5 Registration jurisdictions

1. Are you filing this form under the passport system / interface for registration?

Only choose "no" if:

(a) you are seeking registration only in your principal jurisdiction,

(b) you are seeking review as a permitted individual only in your principal jurisdiction

and you are not currently registered under securities legislation in any jurisdiction of Canada,

Yes
[ ]
No
[ ]

2. Check each jurisdiction where you are seeking registration or review as a permitted individual:

[ ]
All jurisdictions
[ ]
Alberta
[ ]
British Columbia
[ ]
Manitoba
[ ]
New Brunswick
[ ]
Newfoundland and Labrador
[ ]
Northwest Territories
[ ]
Nova Scotia
[ ]
Nunavut
[ ]
Ontario
[ ]
Prince Edward Island
[ ]
Québec
[ ]
Saskatchewan
[ ]
Yukon

Item 6 Individual categories

1. On Schedule C, check each category for which you are seeking registration as an individual or review as a permitted individual. If you are seeking review as a permitted individual, check each category that describes your position with your sponsoring firm.

2. If you are seeking registration as a representative of a mutual fund dealer or of a scholarship plan dealer in Québec, are you covered by your sponsoring firm's professional liability insurance?

Yes
[ ]
No
[ ]

If "No", state:

The name of your insurer ____________________

Your policy number ____________________

Item 7 Address and agent for service

1. Address for service

You must have one address for service in each province or territory where you are submitting this form. A residential address or a business address is acceptable. A post office box is not acceptable. Complete Schedule D for each additional address for service you are providing.

Address for service:

____________________

(number, street, city, province or territory, postal code)

Telephone number ____________________

Fax number, if applicable ____________________

E-mail address, if available ____________________

2. Agent for service

If you have appointed an agent for service, provide the following information for the agent in each province or territory where you have an agent for service. The address of your agent for service must be the same as the address for service above. If your agent for service is not an individual, provide the name of your contact person.

Name of agent for service: ____________________

Contact person: ____________________ Last name, First name

Item 8 Proficiency

1. Course, examination or designation information and other education

Complete Schedule E to indicate each course, examination and designation that is required for registration or approval and that you have successfully completed or have been exempted from.

[ ]
Check here if you are not required under securities legislation or derivatives legislation or both, or the rules of an SRO to satisfy any course, examination or designation requirements.

2. Student numbers

If you have a student number for a course that you successfully completed with one of the following organizations, provide it below:

CSI Global Education (formerly Canadian Securities Institute): ____________________

IFSE Institute (formerly IFIC): ____________________

Institute of Canadian Bankers (ICB): ____________________

CFA Institute (formerly AIMR): ____________________

Advocis (formerly CAIFA): ____________________

RESP Dealers Association of Canada: ____________________

Other: ____________________

3. Exemption refusal

Has any securities regulator, derivatives regulator or SRO refused to grant you an exemption from a course, examination, designation or experience requirement?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule F.

4. Relevant securities industry experience

If you are an individual applying for IIROC approval, select "Not Applicable below".

If you have not been registered in the last 36 months and you passed the required examination more than 36 months ago, do you consider that you have gained 12 months of relevant securities industry experience during the 36 month period?

Yes
[ ]
No
[ ]
N/A
[ ]

If "yes", complete Schedule F.

Item 9 Location of employment

1. Provide the following information for your new sponsoring firm. If you will be working out of more than one location, provide the following information for the location out of which you will be doing most of your business.

NRD location number: ____________________

Unique Identification Number (optional) : ____________________

Business address: ____________________ (number, street, city, province, territory or state, country, postal code)

Telephone number: (_____) _______________
Fax number: (_____) ____________________

2. If the firm has a foreign head office, and/or you are not a resident of Canada, provide the address for the location in which you will be conducting business.

Business address: ____________________ (number, street, city, province, territory or state, country, postal code)

Telephone number: (_____) _______________
Fax number: (_____) ____________________

[The following under #3 "Type of location", #4 and #5 is for a Format other than NRD format only]

3. Type of location - for Format other than NRD format only:

[ ] Head office
[ ] Branch or Business Location
[ ] Sub-branch

4. Name of supervisor or branch manager:

5.
[ ]
Check here if the mailing address of the location is the same as the business address provided above. Otherwise, complete the following:

Mailing address: ____________________ (number, street, city, province, territory or state, country, postal code)

Item 10 Current employment, other business activities, officer positions held and directorships

Complete a separate Schedule G for each of your current business and employment activities, including employment and business activities with your sponsoring firm and any employment and business activities outside your sponsoring firm. Also include all business related officer or director positions and any other equivalent positions held, whether you receive compensation or not.

Item 11 Previous employment and other activities

On Schedule H, complete your employment and other activities history for the past 10-years.

Item 12 Resignations and terminations

Have you ever resigned, been terminated or been dismissed for cause by an employer from a position following allegations that you:

1. Violated any statutes, regulations, rules or standards of conduct?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule I Item 12.1.

2. Failed to appropriately supervise compliance with any statutes, regulations, rules or standards of conduct?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule I Item 12.2.

3. Committed fraud or the wrongful taking of property, including theft?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule I Item 12.3.

Item 13 Regulatory disclosure

1. Securities and derivatives regulation

a) Other than a registration or permitted individual status that has been recorded under this NRD number, are you now, or have you ever been, registered or licensed with any securities regulator or derivatives regulator or both in any province, territory, state or country to trade in or advise on securities or derivatives or both?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.1(a).

b) Have you ever been refused registration or a licence to trade in or advise on securities or derivatives or both in any province, territory state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.1(b).

c) Have you ever been denied the benefit of any exemption from registration provided in any securities or derivatives or both legislation or rules in any province, territory, state or country, other than what was disclosed in Item 8(3) of this form?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.1(c).

d) Are you now, or have you ever been subject to any disciplinary proceedings or any order resulting from disciplinary proceedings under any securities legislation or derivatives legislation or both in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.1(d).

2. SRO regulation

a) Other than an approval that has been recorded under this NRD number, are you now, or have you ever been, an approved person of an SRO or similar organization in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item13.2(a).

b) Have you ever been refused approved person status by an SRO or similar organization in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.2(b).

c) Are you now, or have you ever been, subject to any disciplinary proceedings conducted by any SRO or similar organization in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.2(c).

3. Non-securities regulation

a) Are you now, or have you ever been, registered or licensed under any legislation which requires registration or licensing to deal with the public in any capacity other than to trade in or advise on securities or derivatives or both in any province, territory, state or country (e.g. insurance, real estate, accountant, lawyer, teacher)?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.3(a)

b) Have you ever been refused registration or a licence under any legislation relating to your professional activities unrelated to securities or derivatives in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.3(b).

c) Are you now, or have you ever been, a subject of any disciplinary actions conducted under any legislation relating to your professional activities unrelated to securities or derivatives in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule J, Item 13.3(c).

Item 14 Criminal disclosure

Offences you must disclose

You must disclose all criminal offences committed in any province, territory, state or country. This includes, but is not limited to, criminal offences under federal statutes such as the Criminal Code (Canada), Income Tax Act (Canada), the Competition Act (Canada), Immigration and Refugee Protection Act (Canada) and the Controlled Drugs and Substances Act (Canada) (or its predecessor, the Narcotic Control Act (Canada)). This includes pleas or findings of guilt for impaired driving, which are Criminal Code (Canada) matters. If you have been found guilty of a criminal offence, you must disclose the offence even if you have been granted an absolute or conditional discharge.

With respect to questions 14.2 and 14.4, if you or your firm has been found guilty of a criminal offence, or participated in the Alternative Measures Program within the past three years, you must disclose that offence even if an absolute or conditional discharge has been granted, or the charge has been dismissed, withdrawn or stayed. Some exceptions apply to stayed charges, and the Alternative Measures Program which are outlined below.

If you do not disclose a criminal offence under any statute other than the former Young Offenders Act (Canada)or the Youth Criminal Justice Act (Canada), regulators or, in Québec, the securities regulatory authority or self regulatory organization may treat it as a non-disclosure of material information.

Offences you do not have to disclose

The appropriate response is "No" if any of the following circumstances apply.

You are not required to disclose:

• crimes for which you received an absolute or conditional discharge if the crime has been purged from the criminal records in accordance with the Criminal Records Act (Canada)

• speeding, parking violations or any offence for which a pardon has been granted under the Criminal Records Act (Canada) and the pardon has not been revoked

• stayed charges for summary conviction offences that have been stayed for six months or more

• stayed charges for indictable offences that have been stayed for a year or more, and

• offences under the former Young Offenders Act (Canada)or the Youth Criminal Justice Act (Canada)

With respect to questions 14.2 and 14.4, you are not required to disclose an offence for which you or your firm was found guilty if you or the firm participated in the Alternative Measures Program more than three years ago for that offence.

1. Are there any outstanding or stayed charges against you alleging a criminal offence that was committed in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule K, Item 14.1.

2. Have you ever been found guilty, pleaded no contest to, or granted an absolute or conditional discharge from any criminal offence that was committed in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule K, Item 14.2.

3. To the best of your knowledge, are there any outstanding charges against any firm of which you were, at the time the criminal offence was alleged to have taken place in any province, territory, state or country, a partner, director, officer or major shareholder?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule K, Item 14.3.

4. To the best of your knowledge, has any firm, when you were a partner, officer, director or major shareholder, ever been found guilty, pleaded no contest to or granted an absolute or conditional discharge from a criminal offence that was committed in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule K, Item 14.4.

Item 15 Civil disclosure

1. Are there currently any outstanding civil actions alleging fraud, theft, deceit, misrepresentation or similar misconduct against you or a firm where you are or were a partner, director, officer or major shareholder in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule L, Item 15.1.

2. Have you or a firm where you are or were a partner, director, officer or major shareholder ever been a defendant or respondent in any civil proceeding in which fraud, theft, deceit, misrepresentation or similar misconduct is, or was, successfully established in a judgment in any province, territory, state or country?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule L, Item 15.2.

Item 16 Financial disclosure

1. Bankruptcy

Under the laws of any applicable jurisdiction, have you or has any firm when you were a partner, director, officer or major shareholder of that firm:

a) Had a petition in bankruptcy issued or made a voluntary assignment in bankruptcy or any similar proceeding?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule M, Item 16.1(a).

b) Made a proposal under any legislation relating to bankruptcy or insolvency or any similar proceeding?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule M, Item 16.1(b).

c) Been subject to proceedings under any legislation relating to the winding up or dissolution of the firm, or under the Companies' Creditors Arrangement Act (Canada)?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule M, Item 16.1(c).

d) Been subject to or initiated any proceedings, arrangement or compromise with creditors? This includes having a receiver, receiver-manager, administrator or trustee appointed by or at the request of creditors, privately, through court process or by order of a regulatory authority, to hold your assets.

Yes
[ ]
No
[ ]

If "Yes", complete Schedule M, Item 16.1(d).

2. Debt obligations

Over the past 10 years, have you failed to meet a financial obligation of $5,000 or more as it came due or, to the best of your knowledge, has any firm, while you were a partner, director, officer or major shareholder of that firm, failed to meet any financial obligation of $5,000 or more as it came due?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule M, Item 16.2.

3. Surety bond or fidelity bond

Have you ever been refused for a surety or fidelity bond?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule M, Item 16.3.

4. Garnishments, unsatisfied judgments or directions to pay

Has any federal, provincial, territorial, state authority or court ever issued any of the following against you regarding your indebtedness or, to the best of your knowledge, the indebtedness of a firm where you are or were a partner, director, officer or major shareholder:

Yes
No
 
Garnishment
[ ]
[ ]
 
Unsatisfied judgment
[ ]
[ ]
 
Direction to pay
[ ]
[ ]

If "Yes", complete Schedule M, Item 16.4.

Item 17 Ownership of securities and derivatives firms

Are you now, or have you ever been, a partner or major shareholder of any firm (including your sponsoring firm) whose business is trading in or advising on securities or derivatives or both?

Yes
[ ]
No
[ ]

If "Yes", complete Schedule N.

Item 18 Agent for service

By submitting this form, you certify that in each jurisdiction of Canada where you have appointed an agent for service, you have completed the appointment of agent for service required in that jurisdiction.

Item 19 Submission to jurisdiction

By submitting this form, you agree to be subject to the securities legislation or derivatives legislation or both of each jurisdiction of Canada, and to the by-laws, regulations, rules, rulings and policies (collectively referred to as "rules" in this form) of the SROs to which you have submitted this form. This includes the jurisdiction of any tribunals or any proceedings that relate to your activities as a registrant or a partner, director or officer of a registrant under that securities legislation or derivatives legislation or both or as an Approved Person under SRO rules.

Item 20 Notice of collection and use of personal information

The personal information required under this form is collected on behalf of, and used by, the securities regulatory authorities in the jurisdictions set out in Schedule O to administer and enforce certain provisions of their securities legislation or derivatives legislation or both.

By submitting this form, the individual consents to the collection by the securities regulatory authorities of this personal information, and any police records, records from other government or non-governmental regulators or SROs, credit records and employment records about the individual that the securities regulatory authorities may need to complete their review of the information submitted in this form relating to the individual's continued fitness for registration or approval, if applicable, in accordance with the legal authority of the securities regulatory authorities while the individual is registered with or approved by it. Securities regulatory authorities may contact government and private bodies or agencies, individuals, corporations and other organizations for information about the individual.

If you have any questions about the collection and use of this information, contact the securities regulatory authority in any jurisdiction in which the required information is submitted. See Schedule O for details. In Québec, you can also contact the Commission d'accès à l'information at 1-888-528-7741 or visit its website at www.cai.gouv.qc.ca.

SROs

The principal purpose for the collection of personal information is to assess your suitability for registration or approval and to assess your continued fitness for registration or approval in accordance with the applicable securities legislation and the rules of the SROs.

By submitting this form, you authorize the SROs to which this form is submitted to collect any information from any source whatsoever. This includes, but is not limited to, personal confidential information about you that is otherwise protected by law such as, police, credit, employment, education and proficiency course completion records, and records from other government or non-governmental regulatory authorities, securities commissions, stock exchanges, or other SROs, private bodies, agencies, individuals or corporations, as may be necessary for the SROs to complete their review of your form or continued fitness for registration or approval in accordance with their rules for the duration of the period you remain so registered or approved. You further consent to and authorize the transfer of confidential information between SROs, securities commissions or stock exchanges from whom you now, or may in the future, seek registration or approval, or with which you are currently registered or approved for the purpose of determining fitness or continued fitness for registration or approval or in connection with the performance of an investigation or other exercise of regulatory authority, whether or not you are registered with or approved by them.

By submitting this form, you certify that you understand the rules of the applicable SROs of which you are seeking registration or approval or of which your sponsoring firm is a member or participating organization. You also undertake to become conversant with the rules of any SROs of which you or your sponsoring firm becomes a member or participating organization. You agree to be bound by, observe and comply with these rules as they are from time to time amended or supplemented, and you agree to keep yourself fully informed about them as they are amended and supplemented. You submit to the jurisdiction of the SROs from whom you are seeking registration or approval, or of which your sponsoring firm is now or in the future becomes a member or participating organization and, wherever applicable, their Governors, Directors and Committees. You agree that any registration or approval granted pursuant to this form may be revoked, terminated or suspended at any time in accordance with the then applicable rules of the respective SROs. In the event of any such revocation or termination, you must terminate all activities which require registration or approval and, thereafter, not perform services that require registration or approval for any member of the SROs or any approved affiliated company or other affiliate of such member without obtaining the approval of or registration with the SROs, in accordance with their rules.

By submitting this form, you undertake to notify the SROs from whom you are seeking registration or approval or with which you are currently or may in the future be registered or approved of any material change to the information herein provided in accordance with their respective rules. You agree to the transfer of this form, without amendment, to other SROs in the event that at some time in the future you seek registration or approval from such other SROs.

You certify that you have discussed the questions in this form, together with this Agreement, with an Officer or Branch Manager of your sponsoring member firm and, to your knowledge and belief, the authorized Officer or Branch Manager was satisfied that you fully understood the questions and the terms of this Agreement. You further certify that your business activities that are subject to securities rules and derivatives rules or both will be limited strictly to those permitted by the category of your registration or approval.

Item 21 Warning

It is an offence under securities legislation and/or derivatives legislation, including commodity futures legislation to give false or misleading information on this form.

Item 22 Certification

1. Certification -- NRD format

I confirm I have discussed the questions in this form with an officer, branch manager or supervisor of my sponsoring firm. To the best of my knowledge, the officer, branch manager or supervisor was satisfied that I fully understood the questions. I will limit my activities to those permitted by my category of registration.

[ ]
I am making this submission as agent for the individual identified in this form. By checking this box, I certify that the individual provided me with all of the information on this form.

2. Certification -- Format other than NRD format

Individual

By signing below, I certify to the regulator, or in Québec the securities regulatory authority, in each jurisdiction where I am filing or submitting this form, either directly or through the principal regulator, that:

• I have read this form and understand the questions, and

• all of the information provided on this form is true, and complete.

Signature of individual ____________________
Date ____________________

Authorized partner or officer of the firm

By signing below, I certify to the regulator, or in Québec the securities regulatory authority, in each jurisdiction where I am submitting this form, either directly or through the principal regulator, for the individual that:

• the individual identified in this form will be engaged by the sponsoring firm as a registered individual or a permitted individual, and

• I have, or a branch manager, or supervisor, or another officer or partner has, discussed the questions set out in this form with the individual and, to the best of my knowledge, the individual fully understands the questions.

Name of firm ____________________

Name of authorized signing officer or partner ____________________

Title of authorized signing officer or partner ____________________

Signature of authorized signing officer or partner ____________________

Date signed ____________________ (YYYY/MM/DD)

 

SCHEDULE A

Names (Item 1)

Item 1.2 Other personal names

Name 1:

__________

__________

__________

__________

Last name

First name

Second name (N/A)

Third name (N/A)

Provide the reasons for the use of this name (for example, marriage, divorce, court order, commonly used name or nickname)? ____________________

When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

Name 2:

__________

__________

__________

__________

Last name

First name

Second name (N/A)

Third name (N/A)

Provide the reasons for the use of this name (for example, marriage, divorce, court order, commonly used name or nickname)? ____________________

When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

Name 3:

__________

__________

__________

__________

Last name

First name

Second name (N/A)

Third name (N/A)

Provide the reasons for the use of this name (for example, marriage, divorce, court order, commonly used name or nickname)?

When did you use this name?
From:
To:
 
____________________
____________________
(YYYY/MM)
(YYYY/MM)

Item 1.3 Use of other names

Name 1:

Name: ____________________

Provide the reasons for the use of this other name (for example, trade name or team name)?:

If this other name is or was used in connection with any sponsoring firm, did the sponsoring firm approve the use of the name?

Yes
[ ]
No
[ ]
N\A
[ ]
When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

Name 2:

Name: _______________

Provide the reasons for the use of this other name (for example, trade name or team name):

 

If this other name is or was used in connection with any sponsoring firm, did the sponsoring firm approve the use of the name?

Yes
[ ]
No
[ ]
When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

Name 3:

Name: _______________

Provide the reasons for the use of this other name (for example, trade name or team name):

If this other name is or was used in connection with any sponsoring firm, did the sponsoring firm approve the use of the name?

Yes
[ ]
No
[ ]
When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

 

SCHEDULE B

Residential address (Item 2)

Item 2.1 Current and previous residential addresses

If you have lived at your current address for less than 10 years, list all previous addresses for the past 10 years.

You do not have to include a postal code or ZIP code, or a telephone number for any previous address.

Address 1:

Residential address: ____________________ (number, street, city, province, territory or state, country)

When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

Address 2:

Residential address: ____________________ (number, street, city, province, territory or state, country)

When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

Address 3:

Residential address: ____________________ (number, street, city, province, territory or state, country)

When did you use this name?
From:
To:
 
_______________
_______________
(YYYY/MM)
(YYYY/MM)

 

SCHEDULE C

Individual Categories (Item 6)

Check each category for which you are seeking registration, approval or review as a permitted individual.

Categories common to all jurisdictions under securities legislation

Firm categories [Format other than NRD format only]

[ ] Investment Dealer

[ ] Mutual Fund Dealer

[ ] Scholarship Plan Dealer

[ ] Exempt Market Dealer

[ ] Restricted Dealer

[ ] Portfolio Manager

[ ] Restricted Portfolio Manager

[ ] Investment Fund Manager

Individual categories and permitted activities

[ ] Dealing Representative

[ ] Advising Representative

[ ] Associate Advising Representative

[ ] Ultimate Designated Person

[ ] Chief Compliance Officer

[ ] Officer -- Specify title:

[ ] Director

[ ] Partner

[ ] Shareholder

[ ] Branch Manager (MFDA members only)

[ ] IIROC approval only

IIROC

Approval categories

[ ] Executive

[ ] Director (Industry)

[ ] Director (Non-Industry)

[ ] Supervisor

[ ] Investor

[ ] Registered Representative

[ ] Investment Representative

[ ] Trader

Additional approval categories

[ ] Chief Compliance Officer

[ ] Chief Financial Officer

[ ] Ultimate Designated Person

Products

[ ] Non-Trading

[ ] Securities

[ ] Options

[ ] Futures Contracts and Futures Contract Options

[ ] Mutual Funds only

Customer type

[ ] Retail

[ ] Institutional

[ ] Not Applicable

Portfolio management

[ ] Portfolio Management

Categories under local commodity futures and derivatives legislation

Ontario

Firm categories

[ ] Commodity Trading Adviser

[ ] Commodity Trading Counsel

[ ] Commodity Trading Manager

[ ] Futures Commission Merchant

Individual categories and permitted activities

[ ] Advising Representative

[ ] Salesperson

[ ] Branch Manager

[ ] Officer -- Specify title:

[ ] Director

[ ] Partner

[ ] Shareholder

[ ] IIROC approval only

Manitoba

Firm categories

[ ] Dealer (Merchant)

[ ] Dealer (Futures Commission Merchant)

[ ] Dealer (Floor Broker)

[ ] Adviser

[ ] Local

Individual categories and permitted activities

[ ] Floor Trader

[ ] Salesperson

[ ] Branch Manager

[ ] Adviser

[ ] Officer -- Specify title:

[ ] Director

[ ] Partner

[ ] Futures Contracts Portfolio Manager

[ ] Associate Futures Contracts Portfolio Manager

[ ] IIROC approval only

[ ] Local

Québec -- activities relating to derivatives

For information purposes, indicate whether you will carry on activities as a representative of:

[ ] An Investment Dealer Acting as a Derivatives Dealer

[ ] A Portfolio Manager Acting as a Derivatives Portfolio Manager

 

SCHEDULE D

Address and agent for service (Item 7)

Item 7.1 Address for service

You must have one address for service in each province or territory in which you are now, or are seeking to become, a registered individual or permitted individual. A post office box is not an acceptable address for service.

Address for service: ____________________

(number, street, city, province or territory, postal code)

Telephone number: (_____) _______________
Fax number: (_____) ____________________

E-mail address: ____________________

Item 7.2 Agent for service

If you have appointed an agent for service, provide the following information about the agent. The address for service provided above must be the address of the agent named below.

Name of agent for service: ____________________

(if applicable)

Contact person: ____________________ Last name, First name

 

SCHEDULE E

Proficiency (Item 8)

Item 8.1 Course, examination or designation information and other education

Course, examination, designation or other education
Date completed (YYYY/MM/DD)
Date exempted (YYYY/MM/DD)
Regulator/securities regulatory authority granting the exemption
 
__________
__________
__________
__________
 
__________
__________
__________
__________
 
__________
__________
__________
__________
 
__________
__________
__________
__________

If you have listed the CFA Charter in Item 8.1, please indicate by checking the box below whether you are a current member of the CFA Institute permitted to use the CFA Charter.

Yes
[ ]
No
[ ]

If "no", please explain why you no longer hold this designation:

____________________

____________________

____________________

If you have listed the CIM designation in Item 8.1, please indicate by checking the box below whether you are currently permitted to use the CIM designation.

Yes
[ ]
No
[ ]

If "no", please explain why you no longer hold this designation:

____________________

____________________

____________________

 

SCHEDULE F

Proficiency (Items 8.3 and 8.4)

Item 8.3 Exemption refusal

Complete the following for each exemption that was refused.

1. Which securities regulator, derivatives regulator or SRO refused to grant the exemption?

____________________

State the name of the course, examination, designation or experience requirement:

____________________

State the reason given for not being granted the exemption:

____________________

Date exemption refused: ____________________ (YYYY/MM/DD)

2. Which securities regulator, derivatives regulator or SRO refused to grant the exemption?

____________________

State the name of the course, examination, designation or experience requirement:

____________________

State the reason given for not being granted the exemption:

____________________

Date exemption refused: ____________________ (YYYY/MM/DD)

3. Which securities regulator, derivatives regulator or SRO refused to grant the exemption?

____________________

State the name of the course, examination, designation or experience requirement:

____________________

State the reason given for not being granted the exemption:

____________________

Date exemption refused: ____________________ (YYYY/MM/DD)

Item 8.4 Relevant securities industry experience

Describe your responsibilities in areas relating to the category you are applying for, including the title(s) you have held, as well as start and end dates :

____________________

____________________

____________________

What is the percentage of your time devoted to these activities?

_____ %

Indicate the continuing education activities which you have participated in during the last 36 months and which are relevant to the category of registration you are applying for:

____________________

____________________

____________________

____________________

 

SCHEDULE G

Current employment, other business activities, officer positions held and directorships

(Item 10)

Complete a separate Schedule G for each of your current business and employment activities with your sponsoring firm and with all other organizations. This includes any business related officer or director positions held, or any other equivalent positions held, whether you receive compensation or not.

1. Start date ____________________ (YYYY/MM/DD)

2. Firm information

[ ] Check here if this activity is employment with your sponsoring firm.

If the activity is with your sponsoring firm, you are not required to indicate the firm name and address information below:

Name of business or employer: ____________________

Address of business or employer: ____________________ (number, street, city, province, territory or state, country)

Name and title of your immediate supervisor: ____________________

3. Description of duties

Describe all employment and business activities related to this employer. Include the nature of the business and your duties, title or relationship with the business. If you are seeking registration that requires specific experience, include details with this firm such as level of responsibility, value of accounts under direct supervision, number of years of experience, and percentage of time spent on each activity.

____________________

4. Number of work hours per week

How many hours per week do you devote to this business or employment? ____________________

If this activity is employment with your sponsoring firm and you work less than 30 hours per week, explain why.

____________________

5. Conflicts of interest

If you have more than one employer or are engaged in business related activities:

A. Disclose any potential for confusion by clients and any potential for conflicts of interest arising from your multiple employment or business related activities or proposed business related activities.

____________________

____________________

____________________

B. Indicate whether or not any of your employers or organizations where you engage in business related activities are listed on an exchange.

____________________

C. Confirm whether the firm has procedures for minimizing potential conflicts of interest and if so, confirm that you are aware of these procedures.

____________________

____________________

____________________

D. State the name of the person at your sponsoring firm who has reviewed and approved your multiple employment or business related activities or proposed business related activities

____________________

E. If you do not perceive any conflicts of interest arising from this employment, explain why.

____________________

____________________

____________________

 

SCHEDULE H

Previous employment and other activities (Item 11)

Provide the following information for each of your employment and other activities in the past 10-years. Account for all of your time, including full-time and part-time employment, self-employment or military service. Include your status for each, such as unemployed, full-time student, or other similar statuses. Do not include short-term employment of four months or less while a student, unless it was in the securities, derivatives or financial industry.

In addition to the information required in the paragraph above, if you were employed or had business activities in the securities or derivatives industry or both during and before the 10-year period, disclose all your securities and derivatives or both employment or business activities (both before and during the 10-year period).

[ ] Unemployed

[ ] Full-time student

[ ] Employed or self-employed

From:
____________________
(YYYY/MM)
 
To:
____________________
(YYYY/MM)

Complete the following only if you are, or were, employed or self-employed during this period.

Name of business or employer:

____________________

Address of business or employer:

____________________

(number, street, city, province, territory or state, country)

Name and title of immediate supervisor, if applicable:

____________________

Describe the firm's business, your position, duties and your relationship to the firm. If you are seeking registration in a category of registration that requires specific experience, include details of that experience. Examples include level of responsibility, value of accounts under direct supervision, number of years of that experience and research experience, and percentage of time spent on each activity.

Reason why you left the firm:

____________________

____________________

____________________

 

SCHEDULE I

Resignations and terminations (Item 12)

Item 12.1

For each allegation of violation of any statutes, regulations, rules or internal/external standards of conduct, state below (1) the name of the firm from which you resigned, were terminated or dismissed for cause, (2) whether you resigned, were terminated or dismissed for cause, (3) the date you resigned, were terminated or dismissed for cause, and (4) the circumstances relating to your resignation, termination or dismissal for cause.

____________________

Item 12.2

For each allegation of failure to supervise compliance with any statutes, regulations, rules or standards of conduct, state below, (1) the name of the firm from which you resigned, were terminated or dismissed for cause, (2) whether you resigned, were terminated or dismissed for cause, (3) the date you resigned, were terminated or dismissed for cause, and (4) the circumstances relating to your resignation, termination or dismissal for cause.

____________________

Item 12.3

For each allegation of fraud or the wrongful taking of property, including theft, state below (1) the name of the firm from which you resigned, were terminated or dismissed for cause, (2) whether you resigned, were terminated or dismissed for cause, (3) the date you resigned, were terminated or dismissed for cause, and (4) the circumstances relating to your resignation, termination or dismissal for cause.

____________________

 

SCHEDULE J

Regulatory disclosure (Item 13)

Item 13.1 Securities and derivatives regulation

a) For each registration or licence, state below (1) the name of the firm, (2) the securities or derivatives regulator with which you are, or were, registered or licensed, (3) the type or category of registration or licence, and (4) the period that you held the registration or licence.

____________________

b) For each registration or licence refused, state below (1) the name of the firm, (2) the securities or derivatives regulator that refused the registration or licence, (3) the type or category of registration or licence refused, (4) the date of the refusal, and (5) the reasons for the refusal.

____________________

c) For each exemption from registration denied or licence refused, other than what was disclosed in Item 8(3) of this form, state below (1) the party that was refused the exemption from registration or licence, (2) the securities or derivatives regulator that refused the exemption from registration or licence, (3) the type or category or registration or licence refused, (4) the date of the refusal, and (5) the reasons for the refusal.

____________________

d) For each order or disciplinary proceeding, state below (1) the name of the firm, (2) the securities or derivatives regulator that issued the order or is conducting or conducted the proceeding, (3) the date any notice of proceeding was issued, (4) the date any order or settlement was made, (5) a summary of any notice, order or settlement (including any sanctions imposed), (6) whether you are or were a partner, director, officer or major shareholder of the firm and named individually in the order or disciplinary proceeding, and (7) any other relevant details.

____________________

Item 13.2 SRO regulation

a) For each approval, state below (1) the name of the firm, (2) the SRO with which you are or were an approved person, (3) the categories of approval, and (4) the period that you held the approval.

____________________

b) For each approval refused, state below (1) the name of the firm, (2) the SRO that refused the approval, (3) the category of approval refused, (4) the date of the refusal, and (5) the reasons for the refusal.

____________________

c) For each order or disciplinary proceeding, state below (1) the name of the firm, (2) the SRO that issued the order or that is, or was, conducting the proceeding, (3) the date any notice of proceeding was issued, (4) the date any order or settlement was made, (5) a summary of any notice, order or settlement (including any sanctions imposed), (6) whether you are or were a partner, director, officer or major shareholder of the firm and named individually in the order or disciplinary proceeding, and (7) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request.

____________________

Item 13.3 Non-securities regulation

a) For each registration or licence, state below (1) the party who is, or was, registered or licensed (if insurance licensed, also indicate the name of the insurance agency), (2) with which regulatory authority, or under what legislation, the party is, or was, registered or licensed, (3) the type or category of registration or licence, and (4) the period that the party held the registration or licence.

____________________

b) For each registration or licence refused, state below (1) the party that was refused registration or licensing (if insurance licensed, also indicate the name of the insurance agency), (2) with which regulatory authority, or under what legislation, the registration or licence was refused, (3) the type or category of registration or licence refused, (4) the date of the refusal, and (5) the reasons for the refusal.

____________________

c) For each order or disciplinary proceeding, indicate below (1) the party against whom the order was made or the proceeding taken (if insurance licensed, indicate the name of the insurance agency), (2) the regulatory authority that made the order or that is, or was, conducting the proceeding, or under what legislation the order was made or the proceeding is being, or was conducted, (3) the date any notice of proceeding was issued, (4) the date any order or settlement was made, (5) a summary of any notice, order or settlement (including any sanctions imposed), (6) whether you are or were a partner, director, officer or major shareholder of the firm and named individually in the order or disciplinary proceeding and (7) any other information that you think is relevant or that the regulatory authority may request.

____________________

 

SCHEDULE K

Criminal disclosure (Item 14)

Item 14.1

For each charge, state below (1) the type of charge, (2) the date of the charge, (3) any trial or appeal dates, and (4) the court location.

____________________

Item 14.2

For each finding of guilty, pleading no contest to, or granting of an absolute or conditional discharge from a criminal offence state below (1) the offence, (2) the date found guilty, and (3) the disposition (any penalty or fine and the date any fine was paid).

____________________

Item 14.3

For each charge, state below (1) the name of the firm, (2) the type of charge, (3) the date of the charge, (4) any trial or appeal dates, and (5) the court location.

____________________

Item 14.4

For each finding of guilty, pleading no contest to, or granting of an absolute or conditional discharge from a criminal offence state below (1) the name of the firm, (2) the offence, (3) the date of the conviction, and (4) the disposition (any penalty or fine and the date any fine was paid).

____________________

 

SCHEDULE L

Civil disclosure (Item 15)

Item 15.1

For each outstanding civil proceeding, state below (1) the dates the statement of claim and statement of defence were issued, (2) the name of the plaintiff(s) in the proceeding, (3) whether the proceeding is pending or on appeal, (4) whether the proceeding was against a firm where you are, or were, a partner, director, officer or major shareholder and whether you have been named individually in the allegations, and (5) the jurisdiction where the action is being pursued.

____________________

Item 15.2

For each civil proceeding, state below (1) the dates the statement of claim and statement of defence were issued, (2) each plaintiff in the proceeding, (3) the jurisdiction where the action was pursued, (4) whether the proceeding was about a firm where you are, or were, a partner, director, officer or major shareholder and whether you have been named individually in the allegations and (5) a summary of any disposition or any settlement over $10,000. You must disclose any actions settled without admission of liability.

____________________

 

SCHEDULE M

Financial Disclosure (Item 16)

Item 16.1 Bankruptcy

(a) For each event, state below (1) the date of the petition or voluntary assignment, (2) the person or firm about whom this disclosure is being made, (3) any amounts currently owing, (4) the creditors, (5) the status of the matter, (6) a summary of any disposition or settlement, (7) date of discharge or release, if applicable, and (8) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request.

____________________

(b) For each event, state below (1) the date of the proposal, (2) the person or firm about whom this disclosure is being made, (3) any amounts currently owing, (4) the creditors, (5) the status of the matter, (6) a summary of any disposition or settlement, and (7) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request.

____________________

(c) For each event, state below (1) the date of the proceeding, (2) the person or firm about whom this disclosure is being made, (3) any amounts currently owing, (4) the creditors, (5) the status of the matter, (6) a summary of any disposition or settlement, and (7) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request.

____________________

(d) For each proceeding, arrangement or compromise with creditors, state below (1) the date of proceeding, (2) the person or firm about whom this disclosure is being made, (3) any amounts currently owing, (4) the creditors, (5) the status of the matter, (6) a summary of any disposition or settlement, and (7) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request.

____________________

Item 16.2 Debt obligation

For each event, state below (1) the person or firm that failed to meet its financial obligation, (2) the amount that was owing at the time the person or firm failed to meet its financial obligation, (3) the person or firm to whom the amount is, or was, owing, (4) any relevant dates (for example, when payments are due or when final payment was made), (5) any amounts currently owing, and (6) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request, including why obligation has not been met/satisfied.

____________________

Item 16.3 Surety bond or fidelity bond

For each bond refused, state below (1) the name of the bonding company, (2) the address of the bonding company, (3) the date of the refusal, and (4) the reasons for the refusal.

____________________

Item 16.4 Garnishments, unsatisfied judgments or directions to pay

For each garnishment, unsatisfied judgment or direction to pay regarding your indebtedness, indicate below (1) the amount that was owing at the time the garnishment, judgment or direction to pay was rendered, (2) the person or firm to whom the amount is, or was, owing, (3) any relevant dates (for example, when payments are due or when final payment was made), (4) the percentage of earnings to be garnished or the amount to be paid, (5) any amounts currently owing, and (6) any other information that you think is relevant or that the regulator or, in Québec, the securities regulatory authority may request.

____________________

 

SCHEDULE N

Ownership of securities and derivatives firms (Item 17)

Firm name:

What is your relationship to the firm?
Partner [ ]
Major shareholder [ ]

What is the period of this relationship?

From:
To:
(if applicable)
__________
__________
(YYYY/MM)
(YYYY/MM)

Provide the following information:

a) State the number, value, class and percentage of securities, or the amount of partnership interest you own or propose to acquire when you are registered or approved as a result of the review of this form. If acquiring shares when you are so approved or registered, state the source (for example, treasury shares, or if upon transfer, state name of transferor).

____________________

b) State the market value (approximate, if necessary) of any subordinated debentures or bonds of the firm to be held by you or any other subordinated loan to be made by you to the firm:

____________________

c) If another person or firm has provided you with funds to invest in the firm, provide the name of the person or firm and state the relationship between you and that person or firm:

____________________

d) Are the funds to be invested (or proposed to be invested) guaranteed directly or indirectly by any person or firm?

Yes
[ ]
No
[ ]

If "Yes", provide the name of the person or firm and state the relationship between you and that person or firm:

____________________

e) Have you directly or indirectly given up any rights relating to these securities or this partnership interest, or do you, when you are registered or approved as a result of the review of this form, intend to give up any of these rights (including by hypothecation, pledging or depositing as collateral the securities or partnership interest with any firm or person)?

Yes
[ ]
No
[ ]

If "Yes", provide the name of the person or firm, state the relationship between you and that person or firm and describe the rights that have been or will be given up:

____________________

f) Is a person other than you the beneficial owner of the shares, bonds, debentures, partnership units or notes held by you?

Yes
[ ]
No
[ ]

If "Yes", complete (g), (h) and (i).

g) Name of beneficial owner:

__________
__________
__________
__________
Last name
First name
Second name
Third name
(if applicable)
(if applicable)

h) Residential address:

____________________

(number, street, city, province, territory or state, country, postal code)

i) Occupation:

____________________

 

Schedule O

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B
Winnipeg, MB R3C 4K5
Consumer, Corporate and Insurance Services Division
Attention: Director of Registrations
P.O. Box 2000
Telephone (204) 945-2548
Charlottetown, PE C1A 7N8
Fax (204) 945-0330
Attention: Deputy Registrar of Securities
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

 

Form 33-109F5 Change of Registration Information

FORM 33-109F5

CHANGE OF REGISTRATION INFORMATION

(sections 3.1 and 4.1 )

GENERAL INSTRUCTIONS

Complete and submit this form to notify the relevant regulator(s) or, in Québec, the securities regulatory authority, or self-regulatory organization (SRO) of changes to information in the following forms:

1. Form 33-109F6, except for the changes set out in section 3.1 of National Instrument 33-109, or

2. Form 33-109F4.

How to submit this form

To report changes to information in a Form 33-109F4, submit this form at the National Registration Database website in NRD format at www.nrd.ca.

Submit this form in a format other than NRD format to report changes to information in a:

a) Form 33-109F6, or

b) Form 33-109F4, if the individual is relying on the temporary hardship exemption in section 5.1 of National Instrument 31-102 [National Registration Database].

Name of firm _________________________

Registration categories _________________________

NRD number (firm) _________________________

Item 1 Type of form

Check the form that is being updated:

[ ] Form 33-109F6

If submitting changes to Form 33-109F6, please attach a blackline of the amended sections of the form.

[ ] Form 33-109F4 Name of individual ____________________

Item 2 Details of change

Provide the item number and details for each change to the form selected above:

Item number __________ Details _________________________

Effective date of change _________________________ (YYYY/MM/DD)

Item 3 Notice of collection and use of personal information

The personal information required under this form is collected on behalf of, and used by, the securities regulatory authorities in the jurisdictions set out in Schedule A to administer and enforce certain provisions of their securities legislation or derivatives legislation or both.

The personal information required under this form is also collected by and used by the SROs set out in Schedule A to administer and enforce their respective by-laws, regulations, rules, rulings and policies.

By submitting this form, the individual consents to the collection by the securities regulatory authorities or applicable SRO of this personal information, and any police records, records from other government or non-governmental regulators or SROs, credit records and employment records about the individual that the securities regulatory authorities or applicable SRO may need to complete their review of the information submitted in this form relating to the individual's continued fitness for registration or approval, if applicable, in accordance with the legal authority of the securities regulatory authorities while the individual is registered with or approved by it. Securities regulatory authorities or SROs may contact government and private bodies or agencies, individuals, corporations and other organizations for information about the individual.

If you have any questions about the collection and use of this information, contact the securities regulatory authorities or applicable SRO in any jurisdiction in which the required information is submitted. See Schedule A for details. In Québec, you can also contact the Commission d'accès à l'information at 1-888-528-7741 or visit its website at www.cai.gouv.qc.ca.

Item 4 Warning

It is an offence under securities legislation and/or derivatives legislation, including commodity futures legislation to give false or misleading information on this form.

Item 5 Certification

1. Use the following certification when submitting this form in NRD format when making changes to Form 33-109F4

I confirm I have discussed the questions in this form with an officer, branch manager or supervisor of my sponsoring firm. To the best of my knowledge and belief, the officer, branch manager or supervisor was satisfied that I fully understood the questions. I will limit my activities to those permitted by my category of registration.

[ ]
I am making this submission as agent for the individual identified in this form. By checking this box, I certify that the individual provided me with all of the information on this form.

2. Use the following certification when submitting this form in a format other than NRD format when making changes to Form 33-109F6

By signing below I certify to each regulator or, in Québec, the securities regulatory authority, in each jurisdiction where I am submitting this form, either directly or through the principal regulator, that:

• I have read this form and understand the questions, and

• all of the information provided on this form is true, and complete.

Name of authorized signing officer or partner _________________________

Title of authorized signing officer or partner _________________________

Signature of authorized signing officer or partner __________________________

Date signed ____________________ (YYYY/MM/DD)

3. Use the following certification when submitting this form in a format other than NRD format under the temporary hardship exemption in section 5.1 of NI 31-102 when making changes to Form 33-109F4

By signing below, I certify to the regulator or, in Québec, the securities regulatory authority, in each jurisdiction where I am submitting this form, either directly or through the principal regulator, that:

• I have read this form and understand the questions; and

• all of the information provided on this form is true and complete.

Signature of individual _________________________

Date signed ____________________ (YYYY/MM/DD)

 

Schedule A

Contact information for

Notice of collection and use of personal information

Alberta
Nunavut
Alberta Securities Commission,
Legal Registries Division
Suite 600, 250-5th St. SW
Department of Justice
Calgary, AB T2P 0R4
Government of Nunavut
Attention: Information Officer
P.O. Box 1000 Station 570
Telephone: (403) 355-4151
Iqaluit, NU X0A 0H0
Attention: Deputy Registrar of Securities
Telephone: (867) 975-6590
 
British Columbia
Ontario
British Columbia Securities Commission
Ontario Securities Commission
P.O. Box 10142, Pacific Centre
Suite 1903, Box 55
701 West Georgia Street
20 Queen Street West
Vancouver, BC V7Y 1L2
Toronto, ON M5H 3S8
Attention: Freedom of Information Officer
Attention: Compliance and Registrant Regulation
Telephone: (604) 899-6500 or (800) 373-6393 (in BC)
Telephone: (416) 593-8314
e-mail: registration@osc.gov.on.ca
 
Manitoba
Prince Edward Island
The Manitoba Securities Commission
Securities Registry
500 - 400 St. Mary Avenue
Office of the Attorney General B Consumer, Corporate and Insurance Services Division
Winnipeg, MB R3C 4K5
P.O. Box 2000
Attention: Director of Registrations
Charlottetown, PE C1A 7N8
Telephone (204) 945-2548
Attention: Deputy Registrar of Securities
Fax (204) 945-0330
Telephone: (902) 368-6288
 
New Brunswick
Québec
New Brunswick Securities Commission
Autorité des marchés financiers
Suite 300, 85 Charlotte Street
800, square Victoria, 22e étage
Saint John, NB E2L 2J2
C.P. 246, tour de la Bourse
Attention: Director, Regulatory Affairs
Montréal (Québec) H4Z 1G3
Telephone: (506) 658-3060
Attention: Responsable de l'accès à l'information
Telephone: (514) 395-0337 or (877) 525-0337 (in Québec)
 
Newfoundland and Labrador
Saskatchewan
Securities NL
Saskatchewan Financial Services Commission
Financial Services Regulation Division
Suite 601, 1919 Saskatchewan Drive
Department of Government Services
Regina, SK S4P 4H2
P.O. Box 8700, 2nd Floor, West Block
Attention: Director
Confederation Building
Telephone: (306) 787-5842
St. John's, NL A1B 4J6
Attention: Manager of Registrations
Tel: (709) 729-5661
 
Nova Scotia
Yukon
Nova Scotia Securities Commission
Yukon Securities Office
2nd Floor, Joseph Howe Building
Department of Community Services
1690 Hollis Street
P.O. Box 2703 C-6
P.O. Box 458
Whitehorse, YT Y1A 2C6
Halifax, NS B3J 2P8
Attention: Superintendent of Securities
Attention: Deputy Director, Capital Markets
Telephone: (867) 667-5225
Telephone: (902) 424-7768
 
Northwest Territories
Self-regulatory organization
Government of the Northwest Territories
Investment Industry Regulatory Organization of Canada
P.O. Box 1320
121 King Street West, Suite 1600
Yellowknife, NWT X1A 2L9
Toronto, Ontario M5H 3T9
Attention: Deputy Superintendent of Securities
Attention: Privacy Officer
Telephone: (867) 920-8984
Telephone: (416) 364-6133
E-mail: PrivacyOfficer@iiroc.ca

 

Form 33-109F6 Firm Registration

Form 33 -- 109F6 Firm registration

 

Who should complete this form?

 

This form is for firms seeking registration under securities legislation, derivatives legislation or both.

 

Complete and submit this form to seek initial registration as a dealer, adviser or investment fund manager, or to add one or more jurisdiction of Canada or categories to a firm's registration.

 

Definitions

 

Chief compliance officer -- see section 2.1 of NI 31-103.

 

Derivatives -- financial instruments, such as futures contracts (including exchange traded contracts), futures options and swaps whose market price, value or payment obligations are derived from or based on one or more underlying interests. Derivatives can be in the form of instruments, agreements or securities.

 

Firm -- the person or company seeking registration.

 

Foreign jurisdiction -- see National Instrument 14-101 Definitions.

 

Form -- Form 33-109F6 Firm registration.

 

NI 31-103 -- National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations.

 

Jurisdiction or jurisdiction of Canada -- see National Instrument 14-101 Definitions.

 

NI 33-109 -- National Instrument 33-109 Registration Information.

 

NI 52-107 -- National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.

 

NRD -- National Registration Database. For more information, visit www.nrd-info.ca.

 

Parent -- a person or company that directly or indirectly has significant control of another person or company.

 

Permitted individual -- see NI 33-109.

 

Predecessor -- any entity listed in question 3.6 of this form.

 

Principal Regulator -- see NI 33-109.

 

Significant control -- a person or company has significant control of another person or company if the person or company:

 

directly or indirectly holds voting securities representing more than 20 per cent of the outstanding voting rights attached to all outstanding voting securities of the other person or company, or

directly or indirectly is able to elect or appoint a majority of the directors (or individuals performing similar functions or occupying similar positions) of the other person or company.

 

Specified affiliate -- a person or company that is a parent of the firm, a specified subsidiary of the firm, or a specified subsidiary of the firm's parent.

 

Specified subsidiary -- a person or company of which another person or company has significant control.

 

SRO -- see National Instrument 14-101 Definitions.

 

Ultimate designated person -- see section 2.1 of NI 31-103.

 

You -- the individual who completes, submits, files and/or signs the form on behalf of the firm.

 

We and the regulator -- the securities regulatory authority or regulator in the jurisdiction(s) of Canada where the firm is seeking registration.

 

Contents of the form

 

This form consists of the following:

 

Part 1 -- Registration details

Part 2 -- Contact information

Part 3 -- Business history and structure

Part 4 -- Registration history

Part 5 -- Financial condition

Part 6 -- Client relationships

Part 7 -- Regulatory action

Part 8 -- Legal action

Part 9 -- Certification

Schedule A -- Contact information for notice of collection and use of personal information

Schedule B -- Submission to jurisdiction and appointment of agent for service

Schedule C -- Form 31-103F1 Calculation of excess working capital

 

You are also required to submit the following supporting documents with your completed form:

 

1.

Schedule B -- Submission to Jurisdiction and Appointment of Agent for Service for each jurisdiction where the firm is seeking registration (question 2.4)

 

2.

Business plan, policies and procedures manual, and client agreements (British Columbia, Alberta, Manitoba and New Brunswick only) (question 3.3)

 

3.

Constating documents (question 3.7)

 

4.

Organization chart (question 3.11)

 

5.

Ownership chart (question 3.12)

 

6.

Calculation of excess working capital (question 5.1)

 

7.

Directors' resolution approving insurance (question 5.7)

 

8.

Audited financial statements (question 5.13)

 

9.

Letter of direction to auditors (question 5.14)

 

How to complete and submit the form

 

The firm is required to pay a registration fee in each jurisdiction of Canada where it is submitting and filing this form. Refer to the prescribed fees of the applicable jurisdiction for details.

 

All dollar values are in Canadian dollars. If a question does not apply to the firm, write "n/a" in the space for the answer.

 

If the firm is seeking registration in more than one jurisdiction of Canada or category, other than in the category of restricted dealer, you only need to complete and submit one form. If the firm is seeking registration as a restricted dealer, submit and file the form with each jurisdiction of Canada where the firm is seeking that registration.

 

You can complete this form:

 

on paper and deliver it to the principal regulator or relevant SRO

on paper, scan it and e-mail it to the principal regulator or SRO

 

If the firm is seeking registration in Ontario, and Ontario is not the firm's principal regulator, you must also file a copy of this form, without supporting documents, with the Ontario Securities Commission.

 

You can find contact information for submitting and filing the form in Appendix B of Companion Policy 33-109CP Registration Information.

 

We may accept the form in other formats. Please check with the regulator before you complete, submit and file the form. If you are completing the form on paper and need more space to answer a question, use a separate sheet of paper and attach it to this form. Clearly identify the question number.

 

You must include all supporting documents with your submission. We may ask you to provide other information and documents to help determine whether the firm is suitable for registration.

 

In most of this form, answers are required to questions which apply only to Canadian provinces and territories; you will find that the questions are referenced to "jurisdictions" or "jurisdiction of Canada". These refer to all provinces and territories of Canada. However, the questions in Part 4 -- Registration History and Part 7 -- Regulatory Action are to be answered in respect of any jurisdiction in the world.

 

It is an offence under securities legislation or derivatives legislation to give false or misleading information on this form.

 

Updating the information on the form

 

See Part 3 of NI 33-109.

 

The firm is required to notify the regulator, within specified times, of any changes to the information on this form by submitting and filing Form 33-109F5 Change of Registration Information.

 

Collection and use of personal information

 

We and the SROs (if applicable) require personal information about the people referred to in this form as part of our review to determine whether the firm is suitable for registration. If the firm is approved, we also require this information to assess whether the firm continues to meet the registration requirements.

 

We may only:

 

collect the personal information under the requirements in securities legislation or derivatives legislation or both

use this information to administer and enforce provisions of the securities legislation or derivatives legislation or both

 

We may collect personal information from police records, records of other regulators or SROs, credit records, employment records, government and private bodies or agencies, individuals, corporations, and other organizations. We may also collect personal information indirectly.

 

We may provide personal information about the individuals referred to in this form to other regulators, securities or derivatives exchanges, SROs or similar organizations, if required for an investigation or other regulatory issue.

 

If anyone referred to in this form has any questions about the collection and use of their personal information, they can contact the regulator or SRO, if applicable, in the relevant jurisdiction of Canada. See Schedule A for details. In Québec, they can also contact the Commission d'accès à l'information du Québec at 1-888-528-7741 or visit its website at www.cai.gouv.qc.ca.

 

Part 1 -- Registration details

 

1.1

Firm's full legal name

 

Provide the full legal name of the firm as it appears on the firm's constating documents required under question 3.7. If the firm is a sole proprietorship, provide your first, last and any middle names.

 

If the firm's legal name is in English and French, provide both versions.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

1.2

Firm's NRD number

 

For more information, visit www.nrd-info.ca.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

1.3

Why are you submitting this form?

Complete:

[ ]

To seek initial registration as a firm in one or more jurisdictions of Canada

The entire form

 

[ ]

To add one or more jurisdictions of Canada to the firm's registration

Questions 1.1, 1.2, 1.4, 1.5, 2.4, 3.9, 5.4, 5.6{•}, and Part 9

 

[ ]

To add one or more categories to the firm's registration

Questions 1.1, 1.2, 1.4, 1.5, 3.1, 5.1, 5.4, 5.5{•}, 5.6{•}, 5.7, 5.8, Part 6 and Part 9

{•} If the firm is adding Québec as a jurisdiction for registration in the category of mutual fund dealer or scholarship plan dealer, complete question 5.6.

1.4

In what category and jurisdiction is the firm seeking registration? Check all that apply.

 

(a)

Categories under securities legislation

 

Jurisdiction

Abbreviations

Category

AB

BC

MB

NB

NL

NS

NT

NU

ON

PE

QC

SK

YT

Alberta (AB)

Investment dealer

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

British Columbia (BC)

Manitoba (MB)

Mutual fund dealer

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

New Brunswick (NB)

Newfoundland and Labrador (NL)

Scholarship plan dealer

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

Northwest Territories (NT)

Nova Scotia (NS)

Exempt market dealer

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

Nunavut (NU)

Ontario (ON)

Restricted dealer

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

Prince Edward Island (PE)

Québec (QC)

Investment fund manager

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

Saskatchewan (SK)

Portfolio manager

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

Yukon (YT)

Restricted portfolio manager

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

 

(b)

Categories under derivatives legislation (Manitoba and Ontario only)

Category

Manitoba

Dealer (merchant)

[ ]

Dealer (futures commission merchant)

[ ]

Dealer (floor broker)

[ ]

Local

[ ]

Adviser

[ ]

Ontario

Commodity trading adviser

[ ]

Commodity trading counsel

[ ]

Commodity trading manager

[ ]

Futures commission merchant

[ ]

 

(c)

Investment dealers and portfolio managers (Québec only)

 

If the firm is seeking registration in Québec as an investment dealer or a portfolio manager, will the firm also act as a:

 

Derivatives dealer

Yes

[ ]

No

[ ]

Derivatives portfolio manager

Yes

[ ]

No

[ ]

 

1.5

Exemptions

 

Is the firm applying for any exemptions under securities or derivatives legislation?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each exemption:

 

Type of exemption

 

Legislation

 

Jurisdiction(s) where the firm has applied for the exemption

 

AB

BC

MB

NB

NL

NS

NT

NU

ON

PE

QC

SK

YT

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

 

Part 2 -- Contact information

 

Addresses

 

2.1

Head office address

 

A post office box on its own is not acceptable for a head office address.

 

Address line 1

 

Address line 2

 

City

Province/territory/state

 

Country

Postal/zip code

 

Telephone number

Fax number

 

Website

 

If the firm's head office is in Canada, go to question 2.3.

 

If the firm's head office is not in Canada, go to question 2.2.

 

2.2

Firms whose head office is not in Canada

 

(a)

Does the firm have any business addresses in Canada?

 

Yes

[ ]

No

[ ]

 

If yes, provide the firm's primary Canadian business address:

 

Address line 1

 

Address line 2

 

City

Province/territory

 

Postal code

 

The securities regulatory authority in this jurisdiction of Canada is the firm's principal regulator in Canada.

 

(b)

If a firm is not registered in a jurisdiction of Canada or has not completed its first financial year since being registered, indicate the jurisdiction of Canada in which the firm expects most of its clients to be resident at the end of its current financial year. In all other circumstances, indicate the jurisdiction of Canada in which most of the firm's clients were resident at the end of its most recently completed financial year.

 

AB

BC

MB

NB

NL

NS

NT

NU

ON

PE

QC

SK

YT

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

 

2.3

Mailing address

 

A post office box is acceptable for a mailing address.

 

[ ]

Same as the head office address

 

Address line 1

 

Address line 2

 

City

Province/territory/state

 

Country

Postal/zip code

 

2.4

Address for service and agent for service

 

If the firm does not have an office in a jurisdiction of Canada where it is seeking registration, it must appoint an agent for service in that jurisdiction of Canada.

 

Attach a completed Schedule B Submission to Jurisdiction and Appointment of Agent for Service for each jurisdiction of Canada where the firm is seeking registration and does not have an office.

 

Contact names

 

2.5

Ultimate designated person

 

A registered firm must have an individual registered in the category of ultimate designated person.

 

Legal name

 

Officer title

 

Telephone number

 

E-mail address

 

NRD number, if available

 

Address

 

[ ]

Same as firm head office address

 

Address line 1

 

Address line 2

 

City

Province/territory/state

 

Country

Postal/zip code

 

2.6

Chief compliance officer

 

A registered firm must have an individual registered in the category of chief compliance officer.

 

[ ]

Same as ultimate designated person

 

Legal name

 

Officer title

 

Telephone number

 

E-mail address

 

NRD number, if available

 

Address

 

[ ]

Same as firm head office address

 

Address line 1

 

Address line 2

 

City

Province/territory/state

 

Country

Postal/zip code

 

Part 3 -- Business history and structure

 

Business activities

 

3.1

The firm's business

 

Provide a description of the firm's proposed business, including its primary business activities, target market, and the products and services it will provide to clients.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

3.2

Other names

 

In addition to the firm's legal name in question 1.1, does the firm use any other names, such as a trade name?

 

Yes

[ ]

No

[ ]

 

If yes, list all other names and indicate if each name has been registered:

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

3.3

Business documents

 

Does the firm have the following documents to support its business activities?

 

Yes

No

 

(a)

Business plan for at least the next three years

 

(b)

Policies and procedures manual, including account opening procedures and the firm's policy on fairness in allocation of investment opportunities, if applicable

 

If no, explain why the firm does not have the document:

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

If the regulator in British Columbia, Alberta, Manitoba or New Brunswick is the principal regulator of the firm seeking registration, attach the firm's business plan, policies and procedures manual and client agreements, including any investment policy statements and investment management agreements.

 

History of the firm

 

3.4

When was the firm created?

 

- - - - - - - - - -

yyyy/mm/dd

- - - - - - - - - -

 

3.5

How was the firm created?

 

New start-up

[ ]

Go to question 3.7.

Merger or amalgamation

[ ]

Go to question 3.6.

Reorganization

[ ]

Go to question 3.6.

Other statutory arrangement

[ ]

Please specify below and go to question 3.6.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

3.6

Predecessors

 

List the entities that were merged, amalgamated, reorganized or otherwise arranged to create the firm.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

3.7

Constating documents

 

Attach the legal documents that established the firm as an entity, for example, the firm's articles and certificate of incorporation, any articles of amendments, partnership agreement or declaration of trust. If the firm is a sole proprietorship, provide a copy of the registration of trade name.

 

As part of their constating documents, firms whose head office is outside Canada may be required to provide proof of extra-provincial registration.

 

Business structure and ownership

 

3.8

Type of legal structure

 

Sole proprietorship

[ ]

 

Partnership

[ ]

 

Limited partnership

[ ]

Name of general partner __________

 

Corporation

[ ]

 

Other

[ ]

Please specify __________

 

3.9

Business registration number, if applicable

 

This is the firm's corporate registration number or Québec enterprise number (NEQ).

 

List the firm's business registration number for each jurisdiction of Canada where the firm is seeking registration.

 

Business registration number

Jurisdiction of Canada

 

____________________

____________________

 

____________________

____________________

 

____________________

____________________

 

____________________

____________________

 

3.10

Permitted individuals

 

List all permitted individuals of the firm.

 

Name

Title

NRD number, if applicable

 

_______________

_______________

_______________

 

_______________

_______________

_______________

 

_______________

_______________

_______________

 

_______________

_______________

_______________

 

_______________

_______________

_______________

 

3.11

Organization chart

 

Attach an organization chart showing the firm's reporting structure. Include all permitted individuals, the ultimate designated person and the chief compliance officer.

 

3.12

Ownership chart

 

Attach a chart showing the firm's structure and ownership. At a minimum, include all parents, specified affiliates and specified subsidiaries.

 

Include the name of the person or company, and class, type, amount and voting percentage of ownership of the firm's securities.

 

Part 4 -- Registration history

 

The questions in Part 4 apply to any jurisdiction and any foreign jurisdiction.

 

4.1

Securities registration

 

In the last seven years, has the firm, or any predecessors or specified affiliates of the firm been registered or licensed to trade or advise in securities or derivatives?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each registration:

 

Name of entity

 

Registration category

 

Regulator/organization

 

Date registered or licensed (yyyy/mm/dd)

Expiry date, if applicable (yyyy/mm/dd)

 

Jurisdiction

 

4.2

Exemption from securities registration

 

Is the firm currently relying on any exemptions from registration or licensing to trade or advise in securities or derivatives?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each exemption:

 

Type of exemption

 

Regulator/organization

 

Date of exemption (yyyy/mm/dd)

 

Jurisdiction

 

4.3

Membership in an exchange or SRO

 

In the last seven years, has the firm, or any predecessors or specified affiliates of the firm been a member of a securities or derivatives exchange, SRO or similar organization?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each membership:

 

Name of entity

 

Organization

 

Date of membership (yyyy/mm/dd)

Expiry date, if applicable (yyyy/mm/dd)

 

Jurisdiction

 

4.4

Exemption from membership in an exchange or SRO

 

Is the firm currently relying on any exemptions from membership with a securities or derivatives exchange, SRO or similar organization?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each exemption:

 

Type of exemption

 

Organization

 

Date of exemption (yyyy/mm/dd)

 

Jurisdiction

 

4.5

Refusal of registration, licensing or membership

 

Has the firm, or any predecessors or specified affiliates of the firm been refused registration, licensing or membership with a financial services regulator, securities or derivatives exchange, SRO or similar organization?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each refusal:

 

Name of entity

 

Reason for refusal

 

Regulator/organization

 

Date of refusal (yyyy/mm/dd)

 

Jurisdiction

 

4.6

Registration for other financial products

 

Examples of other financial products include financial planning, life insurance and mortgages.

 

In the last seven years, has the firm, or any predecessors or specified affiliates of the firm been registered or licensed under legislation that requires registration or licensing to sell or advise in a financial product other than securities or derivatives?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each registration or licence:

 

Name of entity

 

Type of licence or registration

 

Regulator/organization

 

Date of registration (yyyy/mm/dd)

Expiry date, if applicable (yyyy/mm/dd)

 

Jurisdiction

 

Part 5 -- Financial condition

 

Capital requirements

 

5.1

Calculation of excess working capital

 

Attach the firm's calculation of excess working capital.

 

Investment dealers must use the capital calculation form required by the Investment Industry Regulatory Organization of Canada (IIROC).

 

Mutual fund dealers must use the capital calculation form required by the Mutual Fund Dealers Association of Canada (MFDA), except for mutual fund dealers registered in Québec only

 

Firms that are not members of either IIROC or the MFDA must use Form 31-103F1 Calculation of Excess Working Capital. See Schedule C.

 

5.2

Sources of capital

 

List all cash, cash equivalents, debt and equity sources of the firm's capital.

 

Name of person or entity providing the capital

Type of capital

Amount ($)

 

_______________

__________

_______________

 

_______________

__________

_______________

 

_______________

__________

_______________

 

5.3

Guarantors

 

See Schedule C Form 31-103F1 Calculation of Excess Working Capital.

 

In relation to its business, does the firm:

 

Yes

No

 

(a)

Have any guarantors?

 

(b)

Act as a guarantor for any party?

 

If yes, provide the following information for each guarantee:

 

Name of party to the guarantee

 

NRD number, if applicable

 

Relationship to the firm

Amount of guarantee ($)

 

Details of the guarantee

 

Bonding and insurance

 

Questions 5.4 to 5.8 apply to the firm's bonding or insurance coverage or proposed bonding or insurance coverage for securities and derivatives activities only. This in accordance with Part 12, Division 2 of NI 31-103.

 

5.4

Jurisdictions covered

 

This information is on the financial institution bond.

 

Where does the firm have bonding or insurance coverage?

 

AB

[ ]

BC

[ ]

MB

[ ]

NB

[ ]

NL

[ ]

NS

[ ]

NT

[ ]

NU

[ ]

ON

[ ]

PE

[ ]

QC

[ ]

SK

[ ]

YT

[ ]

 

If the firm's bonding or insurance does not cover all jurisdiction of Canada where it is seeking registration, explain why.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

5.5

Bonding or insurance details

 

This information is on the binder of insurance or on the financial institution bond.

 

Name of insurer

 

Bond or policy number

 

Specific insuring agreements and clauses

 

Coverage for each claim ($)

Annual aggregate coverage ($)

 

Total coverage ($)

 

Amount of the deductible ($)

Expiry date (yyyy/mm/dd)

 

If the firm's insurance or proposed insurance is not in the form of a financial institution bond, explain how it provides equivalent coverage to the bond.

 

- - - - - - - - - - - - - - - - - - - -

 

- - - - - - - - - - - - - - - - - - - -

 

5.6

Professional liability insurance (Québec only)

 

If the firm is seeking registration in Québec as a mutual fund dealer or a scholarship plan dealer, provide the following information about the firm's professional liability insurance:

 

Name of insurer

 

Policy number

 

Specific insuring agreements and clauses

 

Coverage for each claim ($)

Annual aggregate coverage ($)

 

Total coverage ($)

 

Amount of the deductible ($)

Renewal date (yyyy/mm/dd)

 

Jurisdictions covered:

 

AB

BC

MB

NB

NL

NS

NT

NU

ON

PE

QC

SK

YT

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

[ ]

 

Which insurance policy applies to your representatives?

 

Firm's policy

[ ]

Individual's policy

[ ]

Both

[ ]

 

5.7

Directors' resolution approving insurance

 

Attach a directors' resolution confirming that the firm has sufficient insurance coverage for its securities or derivatives-related activities.

 

5.8

Bonding or insurance claims

 

In the last seven years, has the firm made any claims against a bond or on its insurance?

 

Yes

[ ]

No

[ ]

 

If yes, provide the following information for each claim:

 

Type of bond or insurance

 

Date of claim (yyyy/mm/dd)

Amount ($)

 

Reason for claim

 

Date resolved (yyyy/mm/dd)

Result

 

Jurisdiction