Revised Rule: NI - 31-101 - National Registration System

Revised Rule: NI - 31-101 - National Registration System

National Instrument

 

REVISED NOTICE OF RULE

NATIONAL INSTRUMENT 31-101 NATIONAL REGISTRATION SYSTEM,

AND FORM 31-101F1, FORM 31-101F2, AND

NATIONAL POLICY 31-201 NATIONAL REGISTRATION SYSTEM

Introduction

National Instrument 31-101 National Registration System and National Policy 31-201 National Registration System are an initiative of the Canadian Securities Administrators (the CSA or we). The CSA has developed the National Registration System (the NRS), which may be used by investment dealers, advisers, mutual fund dealers and their sponsored individuals in connection with their application for initial registration, amendments to registration or reinstatement of registration or for the approval or review of certain sponsored individuals. The requirements and procedure under the NRS are set out in National Instrument 31-101 National Registration System, Form 31-101F1 Election to use the NRS and Determination of Principal Regulator, Form 31-101F2 Notice of Change (collectively, the Instrument) and National Policy 31-201 National Registration System (the Policy).

The Instrument has been made or is expected to be made by each member of the CSA, and will be implemented as

    • a rule in each of Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island,

    • a regulation in Nunavut, Québec and Saskatchewan,

    an exemptiona blanket order in British Columbia,

    • a code in the Northwest Territories, and

    • a policy in all other jurisdictions represented by the CSA.

      We expect the Policy will be adopted as a policy in all jurisdictions.

      The NRS is being implemented pursuant to the Memorandum of Understanding for the Mutual Reliance Review System signed as of October 14, 1999 between members of the CSA (the MOU). We expect that all jurisdictions will confirm the inclusion of the Instrument and the Policy in the MOU.

      In Ontario, the Instrument and other required materials were delivered to the Chair of Management Board of Cabinet (the Minister) in December. The Minister may approve or reject the Instrument or return it for further consideration. If the Minister approves the Instrument or does not take any further action, the Instrument and Policy will come into force on the date indicated below.

      In Québec, aNational Instrument 31-101 National Registration System was published as a proposed regulation in January 2004. A regulation made under the Securities Act (Québec) (the QSA) is adopted by the Autorité des marchés financiers and, thereafter, must be approved, with or without amendment, by the Minister of Finance whileprior to coming into force. In addition, it should be noted that the Autorité des marchés financiers shall adopt a regulation under the an Act respecting the distribution of financial products and services (the LDPSF) isin order to make the NRS applicable to "firms in group-savings-plans brokerage" and their representatives. Furthermore, the Autorité des marchés financiers is currently evaluating whether it should adopt one or more regulations in order to implement the NRS. Prior to coming into force, a regulation adopted by the Autorité des marchés financiers and must, thereafter, be approved, with or without amendment, by the government. The Instrument was published for comments under the Securities Act in January 2004 and will not need further publication under the QSA Act. Under the LDPSF, the Instrument must be published for a 45-day comment period prior to being submitted for governmental approval. The Instrument will come into force on the date of its publication in the Gazette officielle du Québec or on any later date specified in the regulations. It must also be published in the Bulletin of the Autorité des marchés financiers. Quebec Government or the Minister of Finance.

      In Nova Scotia, the Instrument will be delivered to the Minister for non-objection by the Governor in Council in accordance with Nova Scotia securities law after it is adopted as a rule by the Commission. If the Instrument is not objected to by the Governor in Council, it will come into force in on the date indicated below.April 2004.

      In Nunavut, a Request for Decision to Cabinet will be required to adopt the Instrument as a regulation under the Securities Act (Nunavut).

      Provided all necessary ministerial or other governmental approvals are obtained, we expect to implement the Instrument on April 4, 2005. We will implement the Policy at the same time as the Instrument.

      Substance and Purpose

      The purpose of the NRS is to improve the current registration system through a mutual reliance process. Principles of mutual reliance will be applied to the analysis of registration applications or applications for approval or review of investment dealers, advisers and mutual fund dealers and their sponsored individuals in order to reduce unnecessary duplication in the analysis of applications made in multiple jurisdictions or in subsequent jurisdictions.

      The Instrument sets out the eligibility requirements for firm filers and individual filers to be able to use the NRS. An eligible firm filer elects to use the NRS by submitting a Form 31-101F1. Eligible individual filers whose sponsoring firm has elected to use the NRS must use the NRS when submitting an application to a non-principal regulator.

      The Instrument provides exemptive relief so that filers under the NRS only have to satisfy or comply with the fit and proper requirements, notice requirements and filing requirements applicable in their principal jurisdiction. Fit and proper requirements relate to a filer's suitability to be registered or to be approved. Filers will continue to be subject to the conduct rules applicable in each jurisdiction where they are registered. The Instrument and Policy contain further description of fit and proper requirements and of conduct rules.

      The Policy sets out the procedure to be followed by filers who are submitting applications under the NRS. A filer's principal regulator is generally the securities regulatory authority or regulator of the jurisdiction where the firm filer's head office and directing mind and management is located and where the individual filer's working office is located.

      Generally, when submitting an application under the NRS, filers will only file the materials required by their principal regulator. Further, filers will normally only deal with their principal regulator on their initial application and when seeking to register in additional jurisdictions. Once the principal regulator has reached a decision on the application, non-principal regulators may opt in or opt out of the NRS in connection with that application. Opting out is expected to happen on an exceptional basis.

      Application for registration or approval of individual filers will be made through the National Registration Database (the NRD) implemented under Multilateral Instrument 31-102 National Registration Database and Multilateral Instrument 3133-109 Registration Information. In order to allow efficient implementation and application of the NRS, three key changes will be made to technology underlying the NRD. These changes relate to the selection of principal regulator, opt in / opt out function and unique designation of the NRS submissions.

      Québec anticipates adoptingIn Québec, NRD implementation is principally governed by Regulation 31-102Q respecting National Registration Database and Regulation 33-109Q respecting Registration Information, which reflect the equivalent Multilateral Instruments, on or before the effective date of the Instrument. However, if for any reason, the technology underlying the NRD is not available in Québec as of the effective date or if the Regulations have not been adopted, the Instrument provides for transitional measures with respect to the filing of material in and outside of Québec.. Those regulations came into force on January 1st, 2005.

      The NRS does not apply to renewals of registrations as the CSA feels that processing renewals under current legislation through the NRS could be lengthier than the current process.

      Background

      The Instrument and Policy were published for comment in January and February, 2004. The comment period expired in April, 2004.

      Summary of Written Comments Received by the CSA

      During the comment period, the CSA received submissions from nine commentors on the Instrument and Policy. We have considered the comments received and thank all the commentors. The names of the nine commentors and a summary of the comments on the Instrument and Policy, together with our responses, are contained in Appendix A and Appendix B to this Notice.

      After considering the comments, we have made amendments to the Instrument and Policy to improve the clarity and consistency of the Instrument and Policy. However, as these changes are not material, we are not republishing the Instrument or Policy for a further comment period.

      Summary of Changes to the Proposed Instrument and Policy

      See Appendix C to this Notice for a description of the changes made to the versions of the Instrument and Policy since they were published.

      Local Amendments

      We are amending or repealing elements of local securities legislation and securities directions in conjunction with implementing the NRS. The provincial and territorial securities regulatory authorities may publish, or may have published, these local changes or proposed changes separately in their local jurisdiction.

      Questions

      Please refer your questions to any of:

      Jim Wahl
      Manager, Registration & Compliance
      Alberta Securities Commission
      4th Floor, 300 - 5th Avenue S.W.
      Calgary, AB T2P 3C4
      Direct:
      (403)297-4281
      Fax:
      (403)297-4113
      E-mail:
       
      Susan Toews
      Senior Legal Counsel
      Capital Market Regulations
      British Columbia Securities Commission
      P.O. Box 10142, Pacific Centre
      701 - West Georgia Street
      Vancouver, BC V7Y 1L2
      Direct:
      (604)899-6764
      Fax:
      (604)899-6814
      E-mail:
       
      Douglas R. Brown
      General Counsel &
      Director - Legal, Enforcement & Registration
      The Manitoba Securities Commission
      1130 - 405 Broadway
      Winnipeg, MB R3C 3L6
      Direct:
      (204) 945-0605
      Fax:
      (204) 945-0330
      E-mail:
       
      Andrew Nicholson
      Director Market Regulation
      New Brunswick Securities Commission
      606 - 133 Prince William Street
      Saint John, NB E2L 2B5
      Direct:
      (506) 658-3021
      Fax:
      (506) 658-3059
      E-mail:
       
      Susan W. Powell
      Manager, Corporate Finance and Market Conduct
      Securities Commission of Newfoundland and Labrador
      Government of Newfoundland and Labrador
      2nd Floor, West Block
      Confederation Building
      P.O. Box 8700
      St.John's, NL A1B 4J6
      Direct:
      (709)729-4875
      Fax:
      (709)729-6187
      E-mail:
       
      Brian W. Murphy
      Deputy Director, Capital Markets
      Nova Scotia Securities Commission
      Joseph Howe Building
      2nd Floor, P.O. Box 458
      Halifax, Nova Scotia B3J 2P8
      Direct:
      (902) 424-4592
      Fax:
      (902) 424-4625
      E-mail:
       
      David M. Gilkes, BA, MA, CFE
      Manager, Registrant Regulation
      Capital Markets Branch
      Ontario Securities Commission
      18th Floor, 20 Queen Street West
      Toronto, ON M5H 3S8
      Direct:
      (416)593-8104
      Fax:
      (416)593-8240
      E-mail:
       
      Mark Gallant
      Registrar of Securities
      PEI Securities Division
      Office of the Attorney General
      P.O. Box 2000
      95 Rochford Street
      4th Floor, Shaw Building
      Charlottetown, PE C1A 7N8
      Direct:
      (902) 368-4552
      Fax:
      (902) 368-5283
      E-mail:
       
      Sophie Jean
      Conseillère en réglementation
      Maryse Pineault
      Directrice des pratiques de distribution
      Direction de l'encadrement de la distribution
      Autorité des marchés financiers
      800 square Victoria, 22e étage
      C.P. 246, tour de la Bourse
      Place de la Cité, Tour Cominar
      3e étage
      2640, boulevard Laurier
      MontréalSainte-Foy, QC H4Z 1G3G1V 5C1
      Direct:
      (514) 940-2199 ext. 4786418) 525-0558 ext. 4781
      Toll Free:
      1-877-525-0337 ext. 4781
      Fax:
      (514) 864-7854418) 525-5178
      E-mail:
      sophie.jeanmaryse[email protected]
       
      Gary Crowe
      Registrar of Securities
      Legal Registries Division, Department of Justice
      Government of Nunavut
      P.O. Box 1000, STN 570
      1st Floor, Brown Building
      Iqaluit, NU X0A 0H0
      Direct:
      (867) 975-6586
      Fax:
      (867) 975-6594
      E-mail:
       
      M. Richard Roberts
      Manager, Corporate Affairs
      Registrar of Securities
      Corporate Affairs / Community Services
      Government of Yukon
      P.O. Box 2703
      2134 Second Avenue
      Whitehorse, YT Y1A 5H6
      Direct:
      (867) 667-5225
      Fax:
      (867) 393-6251
      E-mail:

      Instrument and Policy

      The text of the Instrument and Policy follow. or can be found elsewhere on a CSA member website.

      January 7,February 4, 2005

      REVISED NOTICE OF RULE

      NATIONAL INSTRUMENT 31-101 NATIONAL REGISTRATION SYSTEM,

      AND FORM 31-101F1, FORM 31-101F2, AND

      NATIONAL POLICY 31-201 NATIONAL REGISTRATION SYSTEM

      Introduction

      National Instrument 31-101 National Registration System and National Policy 31-201 National Registration System are an initiative of the Canadian Securities Administrators (the CSA or we). The CSA has developed the National Registration System (the NRS), which may be used by investment dealers, advisers, mutual fund dealers and their sponsored individuals in connection with their application for initial registration, amendments to registration or reinstatement of registration or for the approval or review of certain sponsored individuals. The requirements and procedure under the NRS are set out in National Instrument 31-101 National Registration System, Form 31-101F1 Election to use the NRS and Determination of Principal Regulator, Form 31-101F2 Notice of Change (collectively, the Instrument) and National Policy 31-201 National Registration System (the Policy).

      The Instrument has been made or is expected to be made by each member of the CSA, and will be implemented as

        • a rule in each of Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario and Prince Edward Island,

        • a regulation in Nunavut, Québec and Saskatchewan,

        • a blanket order in British Columbia,

        • a code in the Northwest Territories, and

        • a policy in all other jurisdictions represented by the CSA.

          We expect the Policy will be adopted as a policy in all jurisdictions.

          The NRS is being implemented pursuant to the Memorandum of Understanding for the Mutual Reliance Review System signed as of October 14, 1999 between members of the CSA (the MOU). We expect that all jurisdictions will confirm the inclusion of the Instrument and the Policy in the MOU.

          In Ontario, the Instrument and other required materials were delivered to the Chair of Management Board of Cabinet (the Minister) in December. The Minister may approve or reject the Instrument or return it for further consideration. If the Minister approves the Instrument or does not take any further action, the Instrument and Policy will come into force on the date indicated below.

          In Québec, National Instrument 31-101 National Registration System was published as a proposed regulation in January 2004. A regulation made under the Securities Act (Québec) (the QSA) is adopted by the Autorité des marchés financiers and, thereafter, must be approved, with or without amendment, by the Minister of Finance prior to coming into force. In addition, it should be noted that the Autorité des marchés financiers shall adopt a regulation under the Act respecting the distribution of financial products and services (the LDPSF) in order to make the NRS applicable to "firms in group-savings-plans brokerage" and their representatives. Furthermore, the Autorité des marchés financiers is currently evaluating whether it should adopt one or more regulations in order to implement the NRS. Prior to coming into force, a regulation adopted by the Autorité des marchés financiers must be approved, with or without amendment, by the Quebec Government or the Minister of Finance.

          In Nova Scotia, the Instrument will be delivered to the Minister for non-objection by the Governor in Council in accordance with Nova Scotia securities law after it is adopted as a rule by the Commission. If the Instrument is not objected to by the Governor in Council, it will come into force in April 2004.

          In Nunavut, a Request for Decision to Cabinet will be required to adopt the Instrument as a regulation under the Securities Act (Nunavut).

          Provided all necessary ministerial or other governmental approvals are obtained, we expect to implement the Instrument on April 4, 2005. We will implement the Policy at the same time as the Instrument.

          Substance and Purpose

          The purpose of the NRS is to improve the current registration system through a mutual reliance process. Principles of mutual reliance will be applied to the analysis of registration applications or applications for approval or review of investment dealers, advisers and mutual fund dealers and their sponsored individuals in order to reduce unnecessary duplication in the analysis of applications made in multiple jurisdictions or in subsequent jurisdictions.

          The Instrument sets out the eligibility requirements for firm filers and individual filers to be able to use the NRS. An eligible firm filer elects to use the NRS by submitting a Form 31-101F1. Eligible individual filers whose sponsoring firm has elected to use the NRS must use the NRS when submitting an application to a non-principal regulator.

          The Instrument provides exemptive relief so that filers under the NRS only have to satisfy or comply with the fit and proper requirements, notice requirements and filing requirements applicable in their principal jurisdiction. Fit and proper requirements relate to a filer's suitability to be registered or to be approved. Filers will continue to be subject to the conduct rules applicable in each jurisdiction where they are registered. The Instrument and Policy contain further description of fit and proper requirements and of conduct rules.

          The Policy sets out the procedure to be followed by filers who are submitting applications under the NRS. A filer's principal regulator is generally the securities regulatory authority or regulator of the jurisdiction where the firm filer's head office and directing mind and management is located and where the individual filer's working office is located.

          Generally, when submitting an application under the NRS, filers will only file the materials required by their principal regulator. Further, filers will normally only deal with their principal regulator on their initial application and when seeking to register in additional jurisdictions. Once the principal regulator has reached a decision on the application, non-principal regulators may opt in or opt out of the NRS in connection with that application. Opting out is expected to happen on an exceptional basis.

          Application for registration or approval of individual filers will be made through the National Registration Database (the NRD) implemented under Multilateral Instrument 31-102 National Registration Database and Multilateral Instrument 33-109 Registration Information. In order to allow efficient implementation and application of the NRS, three key changes will be made to technology underlying the NRD. These changes relate to the selection of principal regulator, opt in / opt out function and unique designation of the NRS submissions.

          In Québec, NRD implementation is principally governed by Regulation 31-102Q respecting National Registration Database and Regulation 33-109Q respecting Registration Information. Those regulations came into force on January 1st, 2005.

          The NRS does not apply to renewals of registrations as the CSA feels that processing renewals under current legislation through the NRS could be lengthier than the current process.

          Background

          The Instrument and Policy were published for comment in January and February, 2004. The comment period expired in April, 2004.

          Summary of Written Comments Received by the CSA

          During the comment period, the CSA received submissions from nine commentors on the Instrument and Policy. We have considered the comments received and thank all the commentors. The names of the nine commentors and a summary of the comments on the Instrument and Policy, together with our responses, are contained in Appendix A and Appendix B to this Notice.

          After considering the comments, we have made amendments to the Instrument and Policy to improve the clarity and consistency of the Instrument and Policy. However, as these changes are not material, we are not republishing the Instrument or Policy for a further comment period.

          Summary of Changes to the Proposed Instrument and Policy

          See Appendix C to this Notice for a description of the changes made to the versions of the Instrument and Policy since they were published.

          Local Amendments

          We are amending or repealing elements of local securities legislation and securities directions in conjunction with implementing the NRS. The provincial and territorial securities regulatory authorities may publish, or may have published, these local changes or proposed changes separately in their local jurisdiction.

          Questions

          Please refer your questions to any of:

          Jim Wahl
          Manager, Registration & Compliance
          Alberta Securities Commission
          4th Floor, 300 - 5th Avenue S.W.
          Calgary, AB T2P 3C4
          Direct:
          (403)297-4281
          Fax:
          (403)297-4113
          E-mail:
           
          Susan Toews
          Senior Legal Counsel
          Capital Market Regulations
          British Columbia Securities Commission
          P.O. Box 10142, Pacific Centre
          701 - West Georgia Street
          Vancouver, BC V7Y 1L2
          Direct:
          (604)899-6764
          Fax:
          (604)899-6814
          E-mail:
           
          Douglas R. Brown
          General Counsel &
          Director - Legal, Enforcement & Registration
          The Manitoba Securities Commission
          1130 - 405 Broadway
          Winnipeg, MB R3C 3L6
          Direct:
          (204) 945-0605
          Fax:
          (204) 945-0330
          E-mail:
           
          Andrew Nicholson
          Director Market Regulation
          New Brunswick Securities Commission
          606 - 133 Prince William Street
          Saint John, NB E2L 2B5
          Direct:
          (506) 658-3021
          Fax:
          (506) 658-3059
          E-mail:
           
          Susan W. Powell
          Manager, Corporate Finance and Market Conduct
          Securities Commission of Newfoundland and Labrador
          Government of Newfoundland and Labrador
          2nd Floor, West Block
          Confederation Building
          P.O. Box 8700
          St.John's, NL A1B 4J6
          Direct:
          (709)729-4875
          Fax:
          (709)729-6187
          E-mail:
           
          Brian W. Murphy
          Deputy Director, Capital Markets
          Nova Scotia Securities Commission
          Joseph Howe Building
          2nd Floor, P.O. Box 458
          Halifax, Nova Scotia B3J 2P8
          Direct:
          (902) 424-4592
          Fax:
          (902) 424-4625
          E-mail:
           
          David M. Gilkes, BA, MA, CFE
          Manager, Registrant Regulation
          Capital Markets Branch
          Ontario Securities Commission
          18th Floor, 20 Queen Street West
          Toronto, ON M5H 3S8
          Direct:
          (416)593-8104
          Fax:
          (416)593-8240
          E-mail:
           
          Mark Gallant
          Registrar of Securities
          PEI Securities Division
          Office of the Attorney General
          P.O. Box 2000
          95 Rochford Street
          4th Floor, Shaw Building
          Charlottetown, PE C1A 7N8
          Direct:
          (902) 368-4552
          Fax:
          (902) 368-5283
          E-mail:
           
          Maryse Pineault
          Directrice des pratiques de distribution
          Direction de l'encadrement de la distribution
          Autorité des marchés financiers
          Place de la Cité, Tour Cominar
          3e étage
          2640, boulevard Laurier
          Sainte-Foy, QC G1V 5C1
          Direct:
          (418) 525-0558 ext. 4781
          Toll Free:
          1-877-525-0337 ext. 4781
          Fax:
          (418) 525-5178
          E-mail:
           
          Gary Crowe
          Registrar of Securities
          Legal Registries Division, Department of Justice
          Government of Nunavut
          P.O. Box 1000, STN 570
          1st Floor, Brown Building
          Iqaluit, NU X0A 0H0
          Direct:
          (867) 975-6586
          Fax:
          (867) 975-6594
          E-mail:
           
          M. Richard Roberts
          Manager, Corporate Affairs
          Registrar of Securities
          Corporate Affairs / Community Services
          Government of Yukon
          P.O. Box 2703
          2134 Second Avenue
          Whitehorse, YT Y1A 5H6
          Direct:
          (867) 667-5225
          Fax:
          (867) 393-6251
          E-mail:

          Instrument and Policy

          The text of the Instrument and Policy follow or can be found elsewhere on a CSA member website.

          February 4, 2005