Housekeeping Amendment to MFDA Rule 3.4.4 Regarding Early Warning Duration – Mutual Fund Dealers Association of Canada (MFDA)

The Ontario Securities Commission approved the amendment to MFDA Rule 3.4.4 regarding Early Warning Duration. In addition, the Nova Scotia Securities Commission and Saskatchewan Financial Services Commission approved, and the British Columbia Securities Commission did not object to the amendment. The amendment allows MFDA staff to exercise discretion in removing a Member from early warning without waiting until the next month's filing of the monthly financial report, provided there is appropriate evidence or assurance to demonstrate that the issue has been resolved. The amendment is housekeeping in nature. The description and a copy of the amendment is contained in Appendix "A".

APPENDIX "A"

MFDA NOTICE – HOUSEKEEPING AMENDMENT TO MFDA RULE 3.4.4 (EARLY WARNING – DURATION)

Current Rule

Rule 3.4.4 currently provides that a Member shall remain in early warning until the last filed monthly financial reports of the Member demonstrate in the opinion of the MFDA that the Member is no longer required to be designated as being in early warning and the Member has otherwise complied with the requirements of MFDA Rule 3.4.

Reasons for Amendment

The proposed amendment to MFDA Rule 3.4.4 was made to provide MFDA staff with flexibility as to when a Member can be removed from early warning. In some circumstances the cause of a capital deficiency which results in a Member being designated in early warning may be quickly resolved and the resolution may be evidenced through other means. The proposed amendment to Rule 3.4.4 will allow MFDA staff to exercise discretion in removing a Member from early warning upon resolution of the issue, rather than waiting a month to receive the firm's monthly financial report.

Description of Amendment

The amendment will add the phrase "or such other evidence or assurances as may be appropriate in the circumstances" after the reference to the latest filed monthly financial reports of the Member. The amendment is housekeeping in nature in that it reflects changes in routine procedures and administrative practices of the MFDA and does not impose any significant burden or any barrier to competition that is not appropriate.

Comparison with Similar Provisions

The amendments to Rule 3.4.4 are consistent with IDA to By-law 30.8 respecting early warning designation.

Effective Date

The amended Rule will be effective on a date to be subsequently determined by the MFDA.

MUTUAL FUND DEALERS ASSOCIATION OF CANADA

MFDA Rule 3.4.4 (Early Warning – Duration)

On June 18, 2004, the Board of Directors of the Mutual Fund Dealers Association of Canada made and enacted the following amendment to Rule 3.4.4:

3.4.4 Duration. A Member shall remain designated as being in early warning and subject to the provisions of this Rule 3.4 as are applicable, until the latest filed monthly financial reports of the Member, or such other evidence or assurances as may be appropriate in the circumstances demonstrate, in the opinion of the Corporation that the Member no longer is required to be designated as being in early warning and the Member has otherwise complied with this Rule 3.4.