Securities Law & Instruments

Headnote

Section 80 of the CommodityFutures Act - relief for Schedule III bank from requirementto register as an adviser where the performance of the serviceas an adviser is incidental to principal banking business.

Statutes Cited

Commodity Futures Act, R.S.O.1990, c. S.20, as am. 22(1)(b), 80.

IN THE MATTER OF

THE COMMODITIES FUTURES ACT,

R.S.O. 1990, CHAPTER S.20,AS AMENDED

(the "Act")

AND

IN THE MATTER OF

UNITED OVERSEAS BANK LIMITED

 

ORDER

(Section 80)

UPON application (the"Application") by United Overseas Bank Limited ("UOB")to the Ontario Securities Commission (the "Commission")for an order pursuant to section 80 of the Act exempting UOBfrom the requirement to obtain registration as an adviser underclause 22(1)(b) of the Act in connection with the banking businessto be carried on by UOB in Ontario;

AND UPON consideringthe Application and the recommendation of staff of the Commission;

AND UPON UOB having representedto the Commission that:

1. The United Overseas BankLimited is Singapore's largest bank validly existing underthe banking laws of Singapore.

2. The UOB Group offers awide range of financial services through its global networkof branches, offices and subsidiaries - commercial and corporatebanking, personal financial services, private banking, trustservices, treasury services, asset management, corporate finance,capital market activities, venture capital management, proprietaryinvestments, general insurance and life assurance. It alsooffers stockbroking services through its associate, UOB-KayHian Holdings Limited. UOB also has diversified interestsin travel, leasing, property development, hotel management,healthcare, manufacturing and general trading.

3. The Applicant is currentlyrepresented in Canada by United Overseas Bank (Canada) ("UOBC")and it does not conduct any other business activities in Canada.The Applicant intends to provide the current business servicesof UOBC which includes consumer, commercial and corporatelending, treasury functions and deposit-taking (includingto facilitate the lending of money, dealing in foreign exchangeor dealing in securities, other than debt obligations of UOBfor clients). It also plans to secure additional businessopportunities (retail and corporate) through the full servicebranch.

4. UOB will only accept depositsfrom the following:

(a) Her Majesty in rightof Canada or in right of a province or territory, an agentof Her Majesty in either of those rights and includes amunicipal or public body empowered to perform a functionof government in Canada, or an entity controlled by HerMajesty in either of those rights;

(b) the government of aforeign country or any political subdivision thereof, anagency of the government of a foreign country or any politicalsubdivision thereof, or an entity that is controlled bythe government of a foreign country or any political subdivisionthereof;

(c) an international agencyof which Canada is a member, including an internationalagency that is a member of the World Bank Group, the Inter-AmericanDevelopment Bank, the Asian Development Bank, the CaribbeanDevelopment 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 authorized foreign bank under theBank Act; (b) a body corporate to which the Trust and LoanCompanies Act (Canada) applies, (c) an association to whichthe 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 territoryin Canada, (f) a cooperative credit society incorporatedand regulated by or under an Act of the legislature of aprovince or territory in Canada; (g) an entity that is incorporatedor formed by or under an Act of Parliament or of the legislatureof a province or territory in Canada and that is primarilyengaged in dealing in securities, including portfolio managementand investment counseling, and is registered to act in suchcapacity under the applicable Legislation, and (h) a foreigninstitution that is (i) engaged in the banking, trust, loanor insurance business, the business of a cooperative creditsociety or the business of dealing in securities or is otherwiseengaged primarily in the business of providing financialservices, and (ii) is incorporated or formed otherwise thanby or under an Act of Parliament or of the legislature ofa province or territory in Canada);

(e) a pension fund sponsoredby an employer for the benefit of its employees or employeesof an affiliate that is registered and has total plan assetsunder administration of greater than $100 million;

(f) a mutual fund corporationthat is regulated under an Act of the legislature of a provinceor territory in Canada or under the laws of any other jurisdictionand has total assets under administration of greater than$10 million;

(g) an entity (other thanan individual) that has gross revenues on its own booksand records of greater than $5 million as of the date ofits most recent annual financial statements; or

(h) any other entity, wherethe deposit facilitates the provision of the following servicesby the authorized foreign bank to the entity, namely,

(i) lending money,

(ii) dealing in foreignexchange, or

(iii) dealing in securities,other than debt obligations of the authorized foreignbank.

(i) other person if thetrade is in a security which has an aggregate acquisitioncost to the purchaser of greater than $150,000;

collectively referred tofor purposes of this Decision as "Authorized Customers".

5. In June 1999, amendmentsto the Bank Act were proclaimed that permit foreign commercialbanks to establish direct branches in Canada. These amendmentshave created a new Schedule III listing foreign banks permittedto carry on banking activities through branches in Canada;

6. UOB is seeking an orderunder the Bank Act permitting it to establish a full servicebranch under the Bank Act and designating it on Schedule IIIto the Bank Act;

7. Section 31(a) of the Actrefers to a "bank listed on Schedule I or II to the BankAct" in connection with the exemption from the adviserregistration requirement however no reference is made in theAct to entities listed on Schedule III of the Bank Act;

8. In order to ensure thatUOB, as an entity listed on Schedule III to the Bank Act,is able to provide banking services to businesses in Ontarioit requires similar exemptions enjoyed by banking institutionsincorporated under the Bank Act to the extent that the currentexemptions applicable to such banking institutions are relevantto the banking business being undertaken by UOB in Ontario;

9. UOB will be performingcertain foreign exchange advisory services in connection withits principal banking business;

AND UPON the Commissionbeing satisfied that to do so would not be prejudicial to thepublic interest;

IT IS RULED pursuantto section 80 of the Act that upon the making of an order underthe Bank Act permitting UOB to establish a branch listed onSchedule III of that Act, UOB is exempt from the requirementof clause 22(1)(b) of the Act where the performance of the serviceas adviser is solely incidental to UOB's principal banking business.

July 5, 2002.

"Robert L. Shirriff"                    "H.Lorne Morphy"