Application pursuant to section 7.1 of NI 33-109 that the Applicant be relieved from the Form 33-109F4 requirements in respect of certain of its Nominal Officers. The exempted officers are without significant authority over any part of the Applicant's operations and have no connection with its Ontario operation. The Applicant is still required to submit a Form 33-109F4 on behalf of each of its directing minds, who are certain Executive Officers, and its Registered Individuals who are those officers involved in the Ontario business activities.
Securities Act (Ontario), R.S.O. 1990, c. S.5, as am., s. 147.
National Instrument 33-109 Registration Information.
May 29, 2009
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
IN THE MATTER OF
MORGAN STANLEY SMITH BARNEY LLC
(Subsection 7.1(1) of National Instrument 33-109)
UPON the application (the Application) of Morgan Stanley Smith Barney LLC (the Applicant) to the Ontario Securities Commission (the Commission) pursuant to section 7.1 of National Instrument 33-109 Registration Information (NI 33-109) for an exemption from the requirement in subsection 2.1(c) and section 3.3 of NI 33-109 that the Applicant submit a completed Form 33-109F4 for all Permitted Individuals (as defined below) of the Applicant in connection with the Applicant's registration as a dealer in the category of limited market dealer (LMD);
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Applicant having represented to the Director that:
1. The Applicant is a limited liability company formed under the laws of the State of Delaware in the United States of America and is the result of a new joint venture arrangement between Morgan Stanley and Citigroup Global Markets Inc. The head office of the Applicant is located in Purchase, New York.
2. The Applicant has applied to be registered under the Securities Act (Ontario) (the Act) as a dealer in the categories of LMD and international dealer and as an adviser in the category of international adviser (investment counsel and portfolio manager). The Applicant is currently registered as a broker-dealer and investment adviser with the United States Securities and Exchange Commission and as a futures commission merchant with the National Futures Association. The Applicant is also a member of the Financial Industry Regulatory Authority and the New York Stock Exchange.
3. The Applicant provides investment, financing and related services to individual and institutional clients on a global basis.
4. Less than 1% of the aggregate consolidated gross revenues from trading activities of the Applicant in any one financial year would be expected to arise from the Applicant acting as a dealer for clients in Ontario.
5. Pursuant to NI 33-109, an LMD is required to submit, in accordance with National Instrument 31-102 National Registration Database (NI 31-102), a completed Form 33-109F4 for each permitted individual of the Applicant, including all directors and officers who have not applied to become registered individuals of the Applicant under subsection 2.2(1) of NI 33-109. The definition of "permitted individual" in the Instrument includes, among others, a director or officer of a firm.
6. All individuals who intend to trade securities in Ontario on behalf of the Applicant and who are officers of the Applicant, are, or will seek to become, registered as trading officers (the Registered Individuals) in accordance with the registration requirement under section 25(1) of the Act and the requirements of NI 31-102, by submitting a Form 33-109F4 completed with all the information required for a Registered Individual.
7. Other than the Executive Officers (as defined below), the Applicant's remaining officers would not reasonably be considered to be senior officers of the Applicant from a functional point of view. These officers (the Nominal Officers) have the title "managing director," "executive director," "vice president" or similar titles but are not in charge of a principal business unit, division or function of the Applicant and, in any event, are not, or will not be, involved or have oversight of, or direction over, the Applicant's dealer activities in Ontario. The Applicant considers its permitted individuals (the Permitted Individuals) who have obtained, or will be seeking, non-trading officer status (the Executive Officers) as the holders of its most senior executive positions and/or are the individuals that are in direct contact with its Canadian clients from a marketing or direct client relationship perspective.
8. It is currently anticipated that a very small number of the Applicant's hundreds of officers will be involved in the Applicant's trading activity in Ontario and will therefore seek registration as Registered Individuals.
9. The Applicant seeks relief from the requirement to submit Form 33-109F4s for the Nominal Officers. The Applicant proposes to submit Form 33-109F4s on behalf of each of its Executive Officers completed with all the information required for a Permitted Individual. The Applicant also proposes to submit a Form 33-109F4 for the individual at any point in time who is its Designated Compliance Officer under its LMD registration.
10. In the absence of the requested relief, NI 33-109 would require that in conjunction with the Applicant's LMD registration, the Applicant submit a completed Form 33-109F4 for each of its Nominal Officers, rather than limiting this filing requirement to the much smaller number of Executive Officers. In addition, the Applicant would be required to submit a completed Form 33-109F4 for any additional new Nominal Officer, if the requested exemption is not granted. The information contained in the filed Form 33-109F4s would also need to be monitored on a constant basis to ensure that notices of change were submitted in accordance with the requirements of section 5.1 of NI 33-109 and that all information was kept current.
11. Given the relatively limited scope of the Applicant's activities in Ontario and given that the Nominal Officers will not have any involvement in the Applicant's Ontario activities, the preparation and filing of Form 33-109F4s on behalf of each Nominal Officer would achieve no regulatory purpose, while imposing an unwarranted administrative and compliance burden on the Applicant.
AND WHEREAS the Director is satisfied that it would not be prejudicial to the public interest to make the requested Order on the basis of the terms and conditions proposed;
IT IS ORDERED pursuant to section 7.1 of NI 33-109 that the Applicant is exempt from the requirement in subsection 2.1(c) of NI 33-109 and section 3.3 of NI 33-109 to submit a completed Form 33-109F4 for each of its Permitted Individuals who are Nominal Officers not involved in its Ontario business, provided that at no time will the Nominal Officers include any Executive Officer or Designated Compliance Officer, or other officer who will be involved in, or have oversight of, the Applicant's activities in Ontario in any capacity.