Temporary and limited relief for Non-SRO firms from certain provisions of NI 31-103 related to the Client Relationship Model Phase 2 (CRM2) amendments to NI 31-103 which come into effect in stages in 2015 and 2016: ss. 14.11.1, 14.14, 14.14.1, 14.14.2, 14.15, 14.16, 14.19(1)(e) and (h) and 14.19(2)(e) of NI 31-103 -- Fee waiver granted to lead filer -- Effective July 15, 2015 -- certain provisions of the relief expire on January 1, 2016 and certain other provisions of the relief expire on the coming into effect of amendments to NI 31-103 dealing with the same matters.
May 8, 2015
IN THE MATTER OF NATIONAL INSTRUMENT 31-103 REGISTRATION REQUIREMENTS, EXEMPTIONS AND ONGOING REGISTRANT OBLIGATIONS AND SENTRY INVESTMENTS INC. (the Lead Filer) AND CERTAIN OTHER REGISTERED FIRMS AS OF JULY 15, 2015
1. Terms defined in the Securities Act (Ontario), National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and National Instrument 14-101 Definitions have the same meaning in this decision.
2. Certain NI 31-103 provisions related to the implementation of Client Relationship Model -- Phase 2 will come into effect on July 15, 2015 and July 15, 2016 (the 2015/2016 CRM2 Amendments).
3. Some registered firms have indicated they may experience difficulty in implementing the 2015/2016 CRM2 Amendments by their effective dates.
4. Certain technical issues have also been identified relating to the delivery of information prescribed in the 2015/2016 CRM2 Amendments.
5. Under subsection 15.1(2) of NI 31-103 the Director may grant an exemption from that Instrument, in whole or in part, subject to such conditions or restrictions as may be imposed in the exemption.
6. The Lead Filer has applied to the Director, under section 15.1 of NI 31-103, for exemptions for itself and each registered firm as of July 15, 2015, other than a member of IIROC or the MFDA in respect of its activities as an investment dealer or mutual fund dealer, (Non-SRO Member) from the 2015/2016 CRM2 Amendments, subject to the conditions and restrictions set out in this decision.
7. Additionally, the Lead Filer has applied to the Director, under section 8.1 of Ontario Securities Commission Rule 13-502 Fees (Fee Rule), for an exemption from the requirement in section 6.1 to pay a fee for its filing of this exemption application on behalf of itself and other Non-SRO Members.
8. The Lead Filer or any Non-SRO Member as of July 15, 2015 is exempt
(a) from the following NI 31-103 provisions that come into effect on July 15, 2015 if it complies with the provisions beginning with client statements delivered for the period ending December 31, 2015:
(i) section 14.11.1 [determining market value];
(ii) section 14.14 [account statements] provided that for periods ending before December 31, 2015, it delivers statements under section 14.14 as that provision was in force on July 14, 2015;
(iii) section 14.14.1 [additional statements] except for paragraph 14.14.1(2)(g);
(iv) section 14.14.2 [position cost information] provided that if it discloses market value instead of security position cost
(A) under subparagraph 14.14.2(2)(a)(ii), it is not required to specify that the market value being disclosed is as of the transfer date, and
(B) under subparagraph 14.14.2(2)(b)(ii), it may disclose market value as at December 31, 2015 or an earlier date, using the same date and value for all similar clients of the firm;
(v) section 14.15 [security holder statements];
(vi) section 14.16 [scholarship plan dealer statements];
(b) from the requirement in paragraph 14.14.1(2)(g) of NI 31-103 to identify securities that may be covered under an investor protection fund;
(c) from the requirement in paragraphs 14.19(1)(e) and (h) of NI 31-103 to include market value information as at and since July 15, 2015 if instead
(i) an investment performance report is delivered that provides the information for the 12-month period ending December 31, 2016 and the included market value information is as at and since
(A) January 1, 2016, or
(B) a date earlier than January 1, 2016, if the same date is used for all similar clients, or
(ii) the included market value information is as at and since July 15, 2015 or an earlier date used for all similar clients;
(d) from the requirement in paragraph 14.19(2)(e) of NI 31-103 to provide annualized total percentage return information if instead
(i) an investment performance report is delivered that provides the information for the 12-month period ending December 31, 2016, or
(ii) an investment performance report is delivered that provides the information
(A) for the period since the account was opened, if the account has been open for more than one year before the date of the report, or
(B) for the period since July 15, 2015 or an earlier date used for all similar clients, if the account was opened before July 15, 2015.
9. For purposes of this decision, "similar clients" means any of the following:
(a) clients whose accounts or security positions were transferred together to a registered firm,
(b) clients whose accounts or security positions are on the same reporting system if a registered firm has more than one reporting system,
(c) other clients whose accounts or security positions would appear to a reasonable person to be similar in a way that relates to the recording or calculation of market value or position cost.
10. The relief in section 8 of this order comes into effect on July 15, 2015.
11. The exemptions in subparagraphs (8)(a)(i) to (iii), (v) and (vi) of this order expire on January 1, 2016.
12. The exemptions in subparagraphs (8)(a)(iv) and paragraphs (8)(b) to (d) of this order expire on the coming into effect of amendments to NI 31-103 dealing with the same matters.
13. Pursuant to section 8.1 of the Fee Rule, the Lead Filer is exempt from the requirement in section 6.1 of the Fee Rule to pay an activity fee for its filing of this exemption application.
May 8, 2015