Decision pursuant to section 4.1 of Ontario Securities Commission Rule 31-505 forexemption from the suitability requirements under paragraph 1.5(b) subject to certainterms and conditions.
Ontario Securities Commission Rule 31-505 "Conditions of Registration" (1999) 22O.S.C.B. 731.
R.S.O. 1990, C. S.5, AS AMENDED
IN THE MATTER OF
QUEST CAPITAL GROUP LIMITED
WHEREAS the Director has received an application from Quest Capital GroupLimited ("Quest Capital") seeking a decision pursuant to section 4.1 of OntarioSecurities Commission Rule 31-505 -- Conditions of Registration (the "Rule") to exemptQuest Capital from complying with the suitability requirements under paragraph1.5(1)(b) of the Rule.
AND WHEREAS Quest Capital has represented to the Director that:
1. Quest Capital is a registered securities dealer under the Securities Act (Ontario)(the "Act") and is not in breach of any of the requirements under the Act.
2. Quest Capital's head office is located in Toronto, Ontario and its trading facilitieswill be located in Toronto, Ontario.
3. Quest Capital will provide electronic day trading services.
4. Quest Capital will screen its clients to ensure they have the appropriate level ofknowledge and skill to utilize its day trading services, and will enable its clientsto operate from their homes or offices or from Quest Capital's premises. In orderto facilitate the speed of execution required for day trading, Quest Capital willprovide its clients with high speed execution and confirmation systems.
5. Quest Capital will provide access to electronically-traded Toronto StockExchange, Canadian Venture Exchange, New York Stock Exchange, AMEX andNASDAQ listed or quoted stocks only.
6. All prospective customers of Quest Capital will be required to complete a know-your-client form and a new account approval form. Prospective customers willalso be required to review and execute a margin and short sale agreement.
7. Prospective customers will be required to sign a specific day trading orientedCustomer Acknowledgement form which will confirm that they are opening anaccount with Quest Capital, acknowledging that day trading is speculative andthat it is possible to lose all, part of or more than one's investment.
8. Approved customers will be required to provide a minimum initial deposit of U.S.$15,000 to open an account. A customer will not be permitted to trade if his orher account is below U.S. $10,000.
9. The computer software used by Quest Capital customers will not permit over-margined trades or improper short sales.
10. Quest Capital will not provide any advice or recommendations to its clients onspecific investments.
11. Quest Capital will provide all clearing and back office administrative functions forits day trading customers.
Based on the above representations and the representations made in the applicationby Quest Capital dated June 15, 2000, the Director hereby exempts Quest Capital withrespect to the operation of the Quest Capital's day trading facilities from the applicationof paragraph 1.5(1)(b) of the Rule on an order-by-order basis subject to the followingconditions:
1. Quest Capital must exercise diligence in ascertaining the financialcircumstances (including investment experience and investment objectives) of aprospective customer in order to determine whether a day trading strategy issuitable for the customer;
2. Quest Capital must exercise diligence in ascertaining whether the financialcircumstances of a customer have changed such that continuing to pursue a daytrading strategy is no longer suitable for the customer;
3. Quest Capital must exercise diligence to ensure that each customer understandsthe operation of Quest Capital's order execution systems and procedures; and
4. Quest Capital must exercise diligence to ensure that each customer understandsthe risk associated with day trading. Quest Capital will provide each customerwith a separate disclosure statement indicating the risks of day trading.
September 18th, 2000.
"William R. Gazzard"