Securities Law & Instruments

See variation decision dated January 6, 2003, which varies this decision.

Headnote

Section 5.1 - OSC Rule 31-506 - exemption tomutual fund dealer from the requirement to be a member of theMutual Fund Dealers Association of Canada - exemption for alimited period of time.

Applicable Ontario Securities CommissionRule

Rule 31-506 - SRO Membership - Mutual Fund Dealers.

IN THE MATTER OF

THE SECURITIES ACT

R.S.O. 1990, C. S.5, AS AMENDED(the "Act")

AND

IN THE MATTER OF

ONTARIO SECURITIES COMMISSIONRULE 31-506

SRO MEMBERSHIP B MUTUAL FUNDDEALERS (the "Rule")

AND

IN THE MATTER OF

KINGSGATE FINANCIAL GROUPLIMITED

 

EXEMPTION

(Section 5.1 of the Rule)

UPON the Director having received anapplication (the "Application") from Kingsgate FinancialGroup Limited. ("Kingsgate") seeking a decision pursuantto section 5.1 of the Rule, to exempt Kingsgate from the applicationof section 2.1 of the Rule, which would require Kingsgate tobe a member of the Mutual Fund Dealers Association of Canada(the "MFDA") by July 2, 2002 on the condition thatKingsgate is a member of the MFDA by April 1, 2003;

AND UPON considering the Applicationand the recommendation of staff of the Commission;

AND UPON Kingsgate having representedto the Director that:

1. Kingsgate is registered under the Act asa mutual fund dealer and has its head office in Ontario;

2. Kingsgate filed a membership application(the "MFDA Application") with the MFDA;

3. Kingsgate has complied, on a timely basis,with all requests by the MFDA for information and/or documentspertaining to its MFDA Application;

4. Kingsgate received an exemption from section2.1 of the Rule prior to July 2, 2002 ("the Initial Exemption")on the condition that Kingsgate was a member of the MFDA byDecember 1, 2002;

5. Kingsgate's has delivered to the MFDA anupdated Financial Questionnaire and Report, a signed subordinatedloan agreement and proof of a capital injection sufficientto rectify the risk adjusted capital deficiency it was experiencing;

6. Kingsgate is not aware of any issues whichremain outstanding between it and the MFDA in respect of theMFDA Application;

7. Kingsgate is not, to its knowledge, inbreach of any requirements of the Act or the regulations orrules made thereunder; and

8. Kingsgate will not be a member of the MFDAby December 1, 2002.

AND UPON the Director being satisfiedthat to do so would not be prejudicial to the public interest;

IT IS THE DECISION of the Director, pursuantto section 5.1 of the Rule, that Kingsgate is exempt from therequirement of section 2.1 of the Rule, as modified by the InitialExemption, to be a member of the MFDA by December 1, 2002 onthe condition that, from and after April 1, 2003, so long asKingsgate is registered as a mutual fund dealer under the Actit is a member of the MFDA.

November 30, 2002.

"David M. Gilkes"