Commission Approval of Amendment: OSC Rule - 32-502 - Registration Exemption for Certain Trades by Financial Intermediaries

 

NOTICE OF AMENDMENT TO RULE 32-502

UNDER THE SECURITIES ACT

REGISTRATION EXEMPTION FOR CERTAIN TRADES

BY FINANCIAL INTERMEDIARIES

Notice of Amendment

The Commission has, under section 143 of the Securities Act (the "Act"), amended Rule 32-502 Registration Exemption for Certain Trades by FinancialIntermediaries (the "Amendment").

The Amendment and the material required by the Act to be delivered to the Minister of Finance were delivered on February 11, 1998. If the Minister does notapprove the Amendment, reject the Amendment or return it to the Commission for further consideration, the Amendment will come into force on April 27, 1998.If the Minister does approve the Amendment, the Amendment will come into force 15 days after it is approved.

Concurrently with making the Amendment to Rule 32-502, the Commission has amended subsection 206(1) of the Regulation to the Act. See "Regulations to beAmended" below.

Substance and Purpose of Amendment

Rule 32-502 Registration Exemption for Certain Trades by Financial Intermediaries (the "Rule") was published in the Ontario Securities Commission Bulletin onDecember 20, 1996 ((1996), 19 OSCB 6926). The Rule provides relief from the registration requirements of the Act for certain trades up to and including March31, 1998. The proposed Amendment was published in the Ontario Securities Commission Bulletin on November 7, 1997 ((1997), 20 OSCB 5753). The purposeof the amendment is to remove the "sunset" date of March 31, 1998 so that the registration relief provided by the Rule will not be time limited.

Summary of Amendment

The Rule came into effect on January 1, 1997 and carried forward the relief contained in a deemed rule of the Commission In the Matter of Certain Amendmentsto Regulation 1015 of the Revised Regulations of Ontario 1990 Made Under the Securities Act (1994), 17 OSCB 5516. Subsection 1.1(1) of the Rule providesthat up to and including March 31, 1998, section 25 of the Act does not apply to a trade by a financial intermediary of the type described in subsection 35(1) ofthe Act or section 151 of the Regulation or in securities described in subsection 35(2) of the Act.

Subsection 1.1(2) of the Rule provides that up to and including March 31, 1998 clause 25(1)(b) of the Act does not apply to a trade by a financial intermediaryof the type described in subsection 209(1) of the Regulation.

The Commission is amending the Rule by deleting the "sunset" date of March 31, 1998 and deleting Part 2 of the Rule which contains the effective date ofJanuary 1, 1997. There is no time limitation on the relief provided in the Rule.

Comments

The Commission received two comments on the proposed Rule: one from The Canada Trust Company dated January 30, 1998 and the other from the CanadianBankers Association dated February 5, 1998. Both Canada Trust and the Canadian Bankers Association fully supported the elimination of the sunset date in theproposed Rule as they were of the view that regulation of financial intermediaries in this area was inappropriate at this time. Both expressed the view that theproposed Rule would eliminate unnecessary and costly regulation.

Regulations to be Amended

The Commission has by regulation, amended subsection 206(1) of the Regulation to the Act by deleting the reference to the deemed rule and another deemedrule replaced by Rule 32-503 Registration and Prospectus Exemption for Trades by Financial Intermediaries in Mutual Fund Securities to Corporate SponsoredPlans so that the following words of subsection 206(1) will be deleted:

"Except as otherwise provided in the Rules entitled "In the Matter of Certain Amendments to Regulation 1015 of the Revised Regulations of Ontario, 1990made under the Securities Act" (1994), 17 OSCB 5516 and "In the Matter of Certain Amendments to Regulation 1015 of the Revised Regulations of Ontario,1990 made under the Securities Act" (1994), 17 OSCB 5517,".

The regulation is subject to the approval of the Minister of Finance and will not be effective before the Rule comes into force.

Text of Amendment

The text of the amendment follows.

DATED: February 13, 1998.

AMENDMENT TO ONTARIO SECURITIES COMMISSION RULES

RULE 32-502

REGISTRATION EXEMPTION FOR CERTAIN TRADES

BY FINANCIAL INTERMEDIARIES

1.1 Amendments - Rule 32-502 Registration Exemption for Certain Trades by Financial Intermediaries is amended by

(a) deleting the words in subsection 1.1(1) "Up to and including March 31, 1998,";

(b) deleting the words in subsection 1.1(2) "Up to and including March 31, 1998,"; and

(c) deleting Part 2 of the Rule.