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TD Waterhouse Investor Services, Inc. - ss. 74(1)
Headnote
Commission Decision
The Applicant and its representatives in theApplicant's Canadian call centre are exempted from the registrationrequirements contained in the Securities Act (Ontario).
Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as amendedss. 25(1), 74(1).
Instruments Cited
National Instrument 35-101 - Conditional Exemptionfrom Registration for United States Broker-Dealers and Agents.
IN THE MATTER OF
THE SECURITIES ACT
R.S.O. 1990, CHAPTER S.5,AS AMENDED (the "Act")
AND
IN THE MATTER OF
TD WATERHOUSE INVESTOR SERVICES,INC.
RULING
(Subsection 74(1))
UPON the application (the "Application")of TD Waterhouse Investor Services, Inc. ("TDW") tothe Ontario Securities Commission (the "Commission")for a ruling (the "Ruling") pursuant to subsection74(1) of the Act that, where representatives (the "Representatives")of TDW act on behalf of TDW in respect of trades in securitieswith, or on behalf of, clients of TDW who are not residentsof Canada ("Non-Canadian Clients"), the Representativesand TDW shall not be subject to paragraph 25(1)(a) of the Act;
AND UPON considering the Applicationand recommendation of staff of the Commission;
AND UPON TDW having represented to theCommission as follows:
1. TDW is a corporation incorporated underthe laws of the State of New York, U.S.A. and is a whollyowned indirect subsidiary of The Toronto-Dominion Bank ("TDBank"), a bank listed on Schedule I of the Bank Act(Canada).
2. The head office of TDW is in New York,New York, U.S.A.
3. TDW is registered as a broker-dealer withthe United States Securities and Exchange Commission pursuantto Section 15(b) of the Securities Exchange Act of1934 as amended, to carry on business as a broker-dealer inthe U.S.A.
4. TDW is proposing to transfer a portionof its broker call centre operations to an office in London,Ontario that it will operate through TD Waterhouse CanadianCall Center Inc., a wholly owned subsidiary of TDW that willbe incorporated under the laws of Ontario. This office willbe a call centre (the "London Call Centre") dedicatedto answering inbound phone calls from Non-Canadian Clientsand will not otherwise be accessible to or by any person orcompany other than TDW and its associates and affiliates.
5. The scope of the London Call Centre's operationswill initially consist of responding to inbound Non-CanadianClients calls, providing information on market activitiesand developments and company products and services, customeraccount information, technical support and Web access support,providing stock market quotes and answering customer inquiriesabout market/account activity. Representatives will not initiallytake orders since the calls to be directed to the London CallCentre will be limited to customer service enquiries thatcan be resolved administratively.
6. The Representatives will not be, and willnot initially be required to be, registered under U.S.A. securitieslaw, although they will be finger-printed and required tofollow the employee screening procedures employed by TDW forits non-registered personnel in the U.S.A.
7. The London Call Centre will be operatedin accordance with all applicable rules established by thevarious U.S.A. regulatory authorities, including the SEC andthe New York Stock Exchange (the "NYSE"). The LondonCall Centre will be subject to the same procedures set inplace for TDW's existing U.S.A. business, it will be examinedat least annually by representatives from TDW's compliancestaff in New York, and it will be supervised by one or moreproperly qualified individuals acceptable to the NYSE.
8. Eventually, the Representatives will beregistered under U.S. securities law in order to enable themto accept and route, but not execute, trading orders. TheLondon Call Centre will remain dedicated to answering inboundphone calls from Non-Canadian Clients and individuals ("NI35-101 Clients") referred to in section 2.1 of NationalInstrument 35-101 - Conditional Exemption from Registrationfor United States Broker-Dealers and Agents ("NI 35-101")subject to obtaining any relief required under NI 35-101 todeal with such clients.
9. TDW and the Representatives will not tradein securities with or on behalf of persons or companies whoare resident in Canada except to the extent that TDW and itsagents now conduct trading in Canada in accordance with thedealer registration and prospectus exemptions available pursuantto NI 35-101.
10. TDW and the Representatives who work inthe London Call Centre on behalf of TDW in respect of tradeswith or on behalf of Non-Canadian Clients will comply withall registration and other requirements of applicable securitieslegislation in the U.S.A.
11. The London Call Centre will be an opaquepresence inaccessible to any person or company other thanNon-Canadian Clients and NI 35-101 Clients whose calls aredirected to the London Call Centre by TDW.
12. Without this Ruling, TDW and the Representativeswho work in the London Call Centre on behalf of TDW may beunable to satisfy the registration requirements of paragraph25(1)(a) of the Act.
AND UPON considering the Applicationand the recommendation of the staff of the Commission;
AND UPON the Commission being satisfiedthat to do so would not be prejudicial to the public interest;
IT IS RULED pursuant to subsection 74(1)of the Act that:
(a) he Representatives working in the LondonCall Centre shall not be subject to the requirements ofparagraph 25(1)(a) of the Act where the Representativesact on behalf of TDW in respect of trades in securitieswith or on behalf of Non-Canadian Clients, provided thatthe Representatives comply with all registration and otherrequirements of applicable securities legislation in theU.S.A.; and
(b) TDW shall not be subject to the requirementsof paragraph 25(1)(a) of the Act with respect to tradingby it through the London Call Centre in securities withor on behalf of Non-Canadian Clients, provided that:
(i) a Representative working in the LondonCall Centre acts on behalf of TDW in respect of such trading;and
(ii) TDW complies with all registrationand other requirements of applicable securities legislationin the U.S.A.
July 19, 2002.
"Paul M. Moore" "RobertL. Shirriff"