Proposed amendments to regulatory framework for advisers, dealers and investment fund managers published on July 7, 2016 for 90-day comment period

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July 7, 2016

On July 7, 2016, the Canadian Securities Administrators (CSA) published proposed amendments to the regulatory framework for advisers, exempt market dealers and investment fund managers contained in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and National Instrument 33-109 Registration Information (NI 33-109).

The comment period is open until October 5, 2016. The CSA seeks feedback from all stakeholders on the proposed amendments, which propose to:

  • enhance custody requirements applicable to registered firms that are not members of the Investment Industry Regulatory Organization of Canada or the Mutual Fund Dealers Association of Canada (Non-SRO Firms) in order to:
    • 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,
  • clarify the activities that may be conducted under the exempt market dealer category of registration in respect of trades in prospectus-qualified securities, and expand an existing exemption from the dealer registration requirement for registered advisers who trade in the securities of affiliated investment funds to their clients’ managed accounts,
  • make permanent certain temporary relief granted by the CSA in May 2015 relating to client reporting requirements introduced in 2013 under phase 2 of the Client Relationship Model (CRM2), and also add guidance to the companion policy to NI 31-103 regarding the delivery of information required under CRM2, and
  • incorporate other changes of a minor housekeeping nature.

The proposed changes may be relevant and significant to your category of registration or business model. Accordingly, we strongly encourage you to take this opportunity to review and provide comprehensive comments. The CSA notice also includes a number of important questions related to the proposed amendments.

In addition, the Ontario Securities Commission (OSC) published proposed amendments to Ontario Securities Commission Rule 33-506 (Commodity Futures Act) Registration Information which are consequential in nature and consistent with the proposed amendments to NI 33-109.

For more information, please refer to the CSA notice and the OSC notice, which are available on the OSC’s website and may be accessed through the following link: