In late July 2017, the Canadian Securities Administrators (CSA) published the final amendments (the Amendments) to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and National Instrument 33-109 Registration Information (NI 33-109) and their respective Companion Policies, 31-103CP and 33-109CP.
The Amendments range from technical adjustments to more substantive matters. The CSA has organized the Amendments into four areas: “Custody Amendments,” “Exempt Market Dealer Amendments,” “Client Relationship Model Phase 2 Amendments,” and “Housekeeping Amendments.” The Amendments:
- clarify the activities that may be conducted under the exempt market dealer (EMD) category of registration in respect of trades in prospectus-qualified securities to make it clear that EMDs may not participate in offerings of securities under prospectuses in any capacity;
- make permanent certain temporary relief granted by the CSA in May 2015 relating to the requirements for client reporting (the CRM2 Requirements) and also add guidance to 31-103CP regarding the CRM2 Requirements;
- incorporate other changes to the Instrument of a minor housekeeping nature, and;
- enhance custody requirements applicable to registered firms that are not members of the Investment Industry Regulatory Organization of Canada (IIROC) or the Mutual Fund Dealers Association of Canada (MFDA) (collectively, Non-SRO Firms). IIROC member firms and MFDA member firms will comply with the custodial regimes of IIROC or the MFDA. The Custody Amendments:
- address potential intermediary risks when Non-SRO Firms are involved in the custody of client assets,
- enhance the protection of client assets; and,
- codify existing custodial best practices of Non-SRO Firms.
The Amendments are expected to be in force in all member jurisdictions on December 4, 2017. In some cases, depending on the jurisdiction, this may occur earlier. The Custody Amendments will come into force six months later, on June 4, 2018.
The Final Amendments to NI 31-103 and NI 33-109 are available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.
