Securities Law & Instruments

Headnote

NP 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Coordinated Review -- The relief provides an exemption, subject to terms and conditions, from the dealer registration requirements in s. 25 of the Securities Act (Ontario), and equivalent provisions in the the Legislation of the various Jurisdictions, in respect of trades consisting of Marketing or Wholesaling Activities and Investor Servicing Activities or acts in furtherance of trades related to the registrant's operations as a mutual fund manager and/or portfolio manager of exchange-traded funds.

Statutes Cited

Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., ss. 25, 74(1).

December 19, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

SASKATCHEWAN, ONTARIO, QUEBEC,

NEW BRUNSWICK, NOVA SCOTIA,

PRINCE EDWARD ISLAND, NEWFOUNDLAND AND

LABRADOR, YUKON, NUNAVUT AND

THE NORTHWEST TERRITORIES

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BARCLAYS GLOBAL INVESTORS CANADA LIMITED

(the Filer)

 

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the dealer registration requirement in the Legislation not apply to the Filer or to officers or employees of the Filer (each, a Representative) in respect of any trades in securities of an ETF, as defined below, of which the Filer is the investment fund manager and/or portfolio manager (either, the manager), where:

(i) the trade consists of Marketing or Wholesaling Activities, as defined below; or

(ii) the trade consists of Investor Servicing Activities, as defined below

(the Exemptive Relief Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a coordinated review application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) this decision is the decision of the principal regulator and evidences the decision of each other Decision Maker.

Interpretation

For purposes hereof, ETFs means investment funds that are reporting issuers listed on a recognized stock exchange.

For purposes hereof, Investor Servicing Activities means any conduct with securityholders or potential securityholders, directly or indirectly, in furtherance of another trade in securities of an ETF where such other trade is a purchase or sale of securities of an ETF that is, in each case, made by or through another dealer that is registered under the Legislation of the Jurisdiction in which the other trade occurs, in a category that permits that dealer to act as a dealer in respect of the trade, or pursuant to an exemption from the dealer registration requirement.

For purposes hereof, Marketing or Wholesaling Activities means any act, advertisement or solicitation, directly or indirectly, in furtherance of another trade in securities of an ETF where such other trade is a purchase or sale of securities of an ETF that is, in each case, made by or through another dealer that is registered, under the Legislation of the Jurisdiction in which the other trade occurs, in a category that permits that dealer to act as a dealer in respect of the trade, or pursuant to an exemption from the dealer registration requirement.

Any other terms herein that are defined in National Instrument 14-101 Definitions have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is registered as an investment counsel and portfolio manager, or equivalent, in each of the Jurisdictions, as a limited market dealer in each of Ontario and Newfoundland and Labrador and as a commodity trading manager in Ontario.

2. The Filer carries on business primarily as the trustee and manager of ETFs, as the manager of investment funds that are offered pursuant to an exemption from the prospectus requirement (Pooled Funds) and as the manager of managed accounts that are not ETFs or Pooled Funds (Segregated Accounts).

3. The Filer distributes securities of the Pooled Funds directly, pursuant to its registration as a limited market dealer in Ontario and Newfoundland and Labrador and pursuant to exemptions from the dealer registration requirements in other Jurisdictions.

4. As the trustee and manager of ETFs, the Filer has an interest in the distribution of securities of ETFs. Accordingly, the Filer is involved in Marketing or Wholesaling Activities in respect of ETFs.

5. Marketing or Wholesaling Activities include, but are not limited to:

(i) producing "sales communications", as defined in National Instrument 81-102 Mutual Funds;

(ii) meeting with registered dealers and registered advisers and their respective representatives (whether one-on-one or in a group presentation setting) to discuss ETFs and encourage such dealers and advisers to promote the purchase of ETFs by their clients;

(iii) responding to requests from financial planners, registered dealers, registered advisers and their respective representatives for information regarding ETFs; and

(iv) meeting with institutional clients such as pension plans and their representatives to discuss ETFs and answer any questions such potential clients may have.

6. As the trustee and manager of ETFs, the Filer is from time to time contacted by securityholders or potential securityholders of ETFs. Accordingly, the Filer must engage in Investor Servicing Activities in respect of ETFs.

7. Investor Servicing Activities include, but are not limited to, responding to requests from securityholders or potential securityholders for information regarding an ETF; provided that

(i) any information supplied is available in the prospectus or other publicly available disclosure document relating to the ETF; and

(ii) the Representative does not provide any investment advice in respect of the securities of the ETF.

8. Marketing or Wholesaling Activities and Investor Servicing Activities are conducted only by Representatives who are registered either as advising officers or representatives of the Filer, in its capacity as an investment counsel and portfolio manager or equivalent in any Jurisdiction, or as sales representatives of the Filer, in its capacity as a limited market dealer, in Ontario or Newfoundland and Labrador. No advice with respect to a particular trade is given by any Representative in the context of Marketing or Wholesaling Activities or Investor Servicing Activities.

9. trades in such securities are conducted through appropriately registered dealers except where the Legislation otherwise permits.

10. Without the Requested Relief, the Filer would have to be registered under the Legislation as a dealer in the category of mutual fund dealer (or equivalent category) in order to conduct Marketing or Wholesaling Activities and Investor Servicing Activities.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Maker under the Legislation is that the Exemptive Relief Sought is granted to the Filer provided that the Representative who is responsible for such activities is registered as an advising officer or representative of the Filer, in its capacity as an investment counsel and portfolio manager in any Jurisdiction, or is registered as a sales representative of the Filer, in its capacity as a limited market dealer, in Ontario or Newfoundland and Labrador.

"Wendell S. Wigle"
Commissioner
Ontario Securities Commission
 
"Carol S. Perry"
Commissioner
Ontario Securities Commission