Section80 of the Commodity Futures Act - relief for Schedule III bankfrom the requirement to register as an adviser where the performanceof the service as an adviser is incidental to the principalbanking business.
CommodityFutures Act, R.S.O. 1990, c.S.20, as am., section 22(1)(b) andsection 80.
INTHE MATTER OF
THECOMMODITY FUTURES ACT,
R.S.O.1990, CHAPTER S.20, AS AMENDED
INTHE MATTER OF
UPON application (the "Application") by First CommercialBank ("First Commercial") to the Ontario Securities Commission(the "Commission") for an order pursuant to section 80 of theCommodity Futures Act (Ontario) (the "Act") exemptingFirst Commercial from the requirement to obtain registrationas an adviser under paragraph 22(1)(b) of the Act in connectionwith the banking business to be carried on by First Commercialin Ontario;
ANDUPON considering the Application and the recommendationof staff of the Commission;
ANDUPON First Commercial having represented to the Commissionthat:
1.First Commercial is a full-service commercial chartered bankunder the laws of Taiwan with its head office in Taipei, Taiwan.
2.First Commercial is not, and has no current intention of becoming,a reporting issuer in any Province of Canada, nor are its securitieslisted on any stock exchange in Canada.
3.In June of 1999 amendments to the Bank Act were proclaimed thatpermit commercial banks to establish direct branches in Canada.These amendments have created a new Schedule III listing foreignbanks permitted to carry on banking through branches in Canada.
4.First Commercial received an order dated October 10, 2001 underthe Bank Act permitting it to establish a full service foreignbank branch in Canada and designated it on Schedule III thereto.
5.First Commercial will establish and commence business as a foreignbank branch under the Bank Act. The head office of First Commercialin Canada will be located in Vancouver, British Columbia.
6.The operation of First Commercial's foreign bank branch willbe primarily comprised of corporate banking and mortgage lendingservices.
7.In connection with its foreign bank branch operations in Canada,First Commercial will only accept deposits from the following:
(a) Her Majesty in right of Canada or in right of a provinceor territory, an agent of Her Majesty in either of those rightsand includes a municipal or public body empowered to performa function of government in Canada, or an entity controlledby Her Majesty in either of those rights;
(b) the government of a foreign country or any political subdivisionthereof, an agency of the government of a foreign or any politicalsubdivision thereof, or an entity that is controlled by thegovernment of a foreign country or any political subdivisionthereof;
(c) an international agency of which Canada is a member, includingan international agency that is a member of the World Bank Group,the Inter-American Development Bank, the Asian Development Bank,the Caribbean Development Bank and the European Bank for Reconstructionand Development and any other international regional bank;
(d) a financial institution (i.e.: (a) a bank or an authorizedforeign bank under the Bank Act; (b) a body corporate to whichThe Trust and Loan Companies Act (Canada) applies; (c) an associationto which the Cooperative Credit Association Act (Canada)applies; (d) an insurance company or a fraternal benefit societyto which the Insurance Companies Act (Canada) applies;(e) a trust, loan or insurance corporation incorporated by orunder an Act of the legislature of a province or territory inCanada; (f) a cooperative credit society incorporated and regulatedby or under an Act of the legislature of a province or territoryin Canada; (g) an entity that is incorporated or formed by orunder an Act of Parliament or of the legislature of a provinceor territory in Canada and that is primarily engaged in dealingin securities, including portfolio management and investmentcounselling, and is registered to act in such capacity underthe applicable Legislation; and (h) a foreign institution thatis (i) engaged in the banking, trust, loan or insurance business,the business of a cooperative credit society or the businessof dealing in securities or is otherwise engaged primarily inthe business of providing financial services, and (ii) is incorporatedor formed otherwise than by or under an Act of Parliament orof the legislature of a province or territory in Canada);
(e) a pension fund sponsored by an employer for the benefitof its employees or employees of an affiliate that is registeredand that has total plan assets under administration of greaterthan $100 million;
(f) a mutual fund corporation that is regulated under an Actof the legislature of a province or territory in Canada or underthe laws of any other jurisdiction and that has total assetsunder administration of greater than $10 million;
(g) an entity (other than an individual), that for the fiscalyear immediately preceding the initial deposit, had gross revenueson its own books and records of greater than $5 million; or
(h) any other person if the trade is in a security which hasan aggregate acquisition cost to the purchaser of greater than$150,000;
8.Paragraph 31(a) of the Act refers to a bank listed on ScheduleI or II of the Bank Act in connection with the exemption fromthe adviser registration requirement; however no reference ismade in the Act to entities listed on Schedule III to the BankAct.
9.In order to ensure that First Commercial, as an entity listedon Schedule III to the Bank Act, is able to provide bankingservices to businesses in Ontario, it requires the same exemptionsas other federally regulated banks to the extent that the currentexemptions in the Act applicable to Schedule I and II banksare relevant to the business being undertaken by First Commercialin Ontario.
10.First Commercial will be performing certain foreign exchangeand trade finance advisory services in connection with its principalbanking business in Canada.
ANDUPON the Commission being satisfied that to do so wouldnot be prejudicial to the public interest,
ITIS RULED pursuant to section 80 of the Act that uponthe establishment by First Commercial of a branch designatedin Schedule III of the Bank Act, First Commercial is exemptfrom the requirement of paragraph 22(1)(b) of the Act wherethe performance of the service as an adviser is solely incidentalto First Commercial's principal banking business.
"PaulMoore" "R. Stephen Paddon"