Mutual reliance review system for exemptiverelief applications -- Registered dealer exempted from the requirementsof section 36 of the Act to send trade confirmations for tradesthat the dealer executes on behalf of customer accounts thatare fully managed by the dealer, where: the customer has informedthe dealer that they do not want to receive the trade confirmationfor such managed account trades, the managed account tradesare included in the services for which the customer pays a "wrapfee", and the dealer sends to the customer a statementof account (not less than once a month) that includes certainof the information that would be otherwise be required to beincluded in the trade confirmation.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 36 and 147.
Applicable Ontario Regulations
Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as amended, s. 123.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,
MANITOBA, QUEBEC, ONTARIO,NEW BRUNSWICK,
NOVA SCOTIA, NEWFOUNDLANDAND LABRADOR,
YUKON TERRITORY, NORTHWESTTERRITORIES,
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
RBC DOMINION SECURITIES INC.,
RBC GLOBAL INVESTMENT MANAGEMENTINC. AND
RBC PARAMETERS PORTFOLIOSPROGRAM
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker"), ineach of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, New Brunswick, Nova Scotia, Newfoundland and Labrador,the Yukon Territory, Northwest Territories and Nunavut (collectively,the "Jurisdictions") has received an application (the"Application") from RBC Dominion Securities Inc. ("RDCDS") for a decision under the securities legislation (the"Legislation") of each Jurisdiction that the provisions(the "Trade Confirmation Requirement") contained inthe Legislation that require a registered dealer, who has actedas principal or agent in connection with a trade in a security,to promptly send or deliver to the customer a written confirmation(a "Trade Confirmation") of the transaction, settingforth certain information specified in the Legislation, shallnot apply to RBC DS in respect of trades (a "Managed AccountTrade") where the customer (a "Customer") hasa Managed Account (as defined below) with RBC DS under a portfoliomanagement program (the "Program") operated by RBCDS and known as the "RBC Parameters Portfolio Program"and the trade is made for the Managed Account;
AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS RBC DS has represented tothe Decision Makers that:
1. RBC DS is a corporation incorporated underthe laws of Canada and has its head office in Toronto, Ontario.
2. RBC DS is registered under the legislationof each Jurisdiction as a dealer in the category of "investmentdealer" (or the equivalent), and is authorized to actas an adviser, pursuant to an exemption from the "adviserregistration requirement" (as defined in National Instrument14-101 -- Definitions) that is made available under the Legislationof each Jurisdiction to dealers who are members of the InvestmentDealers Association of Canada (the "IDA").
3. RBC DS provides both discretionary managedand non-discretionary advisory services to individuals, corporationsand other entities seeking wealth management or related services.
4. RBC DS intends to offer the Program throughits network of branches across Canada. Under the Program,RBC DS will act as portfolio manager for Customers who desirecertain discretionary managed services ("Managed Services")from RBC DS through an investment portfolio account ("aManaged Account") under which RBC DS, pursuant to a writtenagreement ("Customer Agreement") made between RBCDS and the Customer, makes investment decisions for the accountand has full discretionary authority to trade in securitiesfor the account without obtaining the specific consent ofthe Customer to the trade.
5. The Program is subject to Investment DealersAssociation Regulation 1300 "Supervision of Accounts"and, in each Jurisdiction, all adviser activities in respectof the Managed Account will be provided by employees of RBCDS who meet the proficiency requirements of a portfolio manageror associate portfolio manager under the Legislation of theJurisdiction.
6. For each Customer, the Managed Serviceswill be described in the Customer Agreement and will includethe following services (the "Wrap Services") forwhich the Customer will pay to RBC DS a fixed percentage "wrap"fee (the "Wrap Fee"): investment research, portfolioselection and management with respect to all securities orother assets in the Managed Account, custody, reporting, andtrade execution. The Wrap Fee will be calculated on the basisof assets under administration in the Managed Account andwill not depend upon the number of transactions effected onbehalf the Managed Account (i.e., no trading commission willbe charged to the Managed Account).
7. Each Managed Account will hold a portfolio(the "Managed Account Portfolio") that will typicallyconsist of a basket of securities (the "RBC ParametersPortfolio") that will, from time to time, be selectedby RBC DS using one or more Guided Portfolio Lists preparedfor internal use by RBC DS. Each Managed Account Portfoliowill be determined on the basis of an RBC Parameters Portfolio,unless the Customer has instructed RBC DS to exclude fromtheir Managed Account securities of a specific industry classificationor other specific securities, or, RBC DS otherwise determines,in its discretion, that the content of the Managed AccountPortfolio should differ from that suggested by the correspondingRBC Parameters Portfolio.
8. Under the Program:
(a) RBC DS will identify the investmentobjective and risk tolerance for each Customer and determinethe appropriate RBC Parameters Portfolio to be used by RBCDS in connection with its selection of securities or otherassets to comprise the Managed Account Portfolio of theCustomer;
(b) RBC DS will be authorized by the Customerin the Customer Agreement to retain RBC Global InvestmentManagement Inc. (as "RBC GIM") to determine whichsecurities will be held in a particular RBC Parameters Portfolioand to act as the agent for RBC DS in respect of the ManagedAccount by performing investment research, security selectionand portfolio management functions in respect of all securitiesor other assets in the Managed Account; and
(c) the Customer will have no contractualrelationship with RBC GIM, but RBC DS will be responsibleto the Customer for all activities of RBC GIM in respectof the Managed Account of the Customer.
9. Except for Nunavut where it is pursuingsuch registration, RBC GIM is registered under the Legislationof each Jurisdiction as an adviser in the category of "investmentcounsel" and "portfolio manager" (or the equivalent).
10. Under the Program, RBC DS will send tothe Customer of each Managed Account:
(a) not less than once every three months,a performance report for the Managed Account; and
(b) not less than once a month, a statementof account (a "Statement of Account") for theManaged Account which identifies the assets of the Customerbeing managed on behalf of the Customer through the ManagedAccount, and includes, for each Managed Account Trade madeduring the period, the information which RBC DS would otherwisehave been required to include in a written confirmationof the Managed Account Trade that was sent or deliveredin accordance with the Trade Confirmation Requirement, exceptfor the following information (which will be maintainedby RBC DS in its books and records and made available tothe Customer upon request):
(i) where RBC DS acted as agent, the nameof the person or company from, to or through whom thesecurity was bought or sold;
(ii) the date name of the stock exchange,if any, upon which the transaction took place; and
(iii) the name of the salesperson, ifany, in the transaction.
11. Customers paying a fixed percentage feefor a discretionary managed service, such as the Program,have advised RBC DS that they would prefer not to receiveTrade Confirmations for Managed Account Trades.
12. There will be no impact on fees or expensesto be paid by a Customer resulting from the Customer instructingRBC DS that the Customer does not wish to receive Trade Confirmationsfor Managed Account Trades.
AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Makers pursuantto the Legislation is that RBC DS shall not be subject to theTrade Confirmation Requirement for any Managed Account Trade,provided that:
(A) the Customer has previously informed RBCDS that the Customer does not wish to receive Trade Confirmationsfor Managed Account Trades; and
(B) in the case of each such Managed AccountTrade, RBC DS sends to the Customer the corresponding Statementof Account, that includes the information for the ManagedAccount Trade, referred to in paragraph 10(b), above.
May 21, 2003.
"Harold P. Hands"
"Robert W. Korthals"