Trades by U.S. licensed broker dealer, which is an affiliate of Ontario registered investment dealer, exempted from requirements of clause 25(1)(a) of the Act, for trades made to persons or companies that are resident in the U.S.A., where the trade is made by the U.S. dealer (in its own right, or on behalf of another person or company resident in the U.S.) through individuals that are officers or salespersons of both the U.S. licensed dealer and Ontario registrant -- Individuals must be appropriately registered to make the trade on behalf of the Ontario registrant if instead the Ontario registrant were making the trade to an Ontario resident.
Securities Act, R.S.O. 1990, c. S.5, as am., ss. 25(1)(a), 74(1).
August 5, 2005
IN THE MATTER OF THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED (the Act)
IN THE MATTER OF
GENUITY CAPITAL MARKETS
GENUITY CAPITAL MARKETS USA CORP.
(Subsection 74(1) of the Act)
UPON the application (the Application) of GENUITY CAPITAL MARKETS (Genuity Canada) and GENUITY CAPITAL MARKETS USA CORP. (Genuity U.S.) to the Ontario Securities Commission (the Commission) for a ruling pursuant to subsection 74(1) of the Act that where persons (dual representatives) who are salespersons or officers of Genuity U.S., who are also registered under the Act to trade on behalf of Genuity Canada as salespersons or officers of Genuity Canada, act on behalf of Genuity U.S. in respect of trades in securities to persons or companies (U.S. Clients) that are resident in the United States of America (the U.S.A.), and the trade is made by Genuity U.S., in its own right or on behalf of U.S. Clients, such trades shall not be subject to clause 25(1)(a) of the Act;
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON representation to the Commission that:
1. Genuity Canada, a general partnership formed under the laws of Ontario, is registered under the Act as a dealer in the categories of "broker" and "investment dealer";
2. the head office (the Ontario Office) of Genuity Canada is in Ontario;
3. Genuity Canada is not registered under applicable U.S. securities laws to carry on the business of a securities dealer in the U.S.A;
4. Genuity Canada does not trade in securities with or on behalf of U.S. Clients;
5. Genuity U.S., a corporation incorporated under the laws of Ontario, is not registered under the Act;
6. Genuity U.S. is a wholly-owned subsidiary of Genuity Canada;
7. Genuity U.S. will operate out of the Ontario Office;
8. Genuity U.S. is registered as a "broker-dealer" by the Securities and Exchange Commission of the U.S.A. to carry on the business of a broker-dealer in the U.S.A. pursuant to section 15(b) of the U.S. Securities Exchange Act of 1934 (the 1934 Act) and has applied to be a member of the National Association of Securities Dealers, Inc;
9. Genuity U.S. was established as a vehicle for trading in Canadian securities with or on behalf of U.S. Clients, the majority of whom will be institutional investors;
10. Genuity U.S. will not trade in securities with or on behalf of persons or companies that are resident in Canada (Canadian Clients);
11. although dual representatives will primarily act on behalf of Genuity Canada, they may also act in Ontario on behalf of Genuity U.S. in respect of trades with or on behalf of U.S. Clients;
12. where Genuity U.S. trades with or on behalf of U.S. Clients, Genuity U.S., and any dual representative who acts on behalf of Genuity U.S. in respect of such trade, will comply with all registration and other requirements of applicable securities legislation in the U.S.A; and
13. Genuity U.S. will file with the Commission such reports as to its trading activities as the Commission may require from time to time;
AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;
IT IS RULED, pursuant to subsection 74(1) of the Act, that trades in securities to U.S. Clients, that are made by Genuity U.S., for itself or on behalf of U.S. Clients, and on behalf of Genuity U.S. by dual representatives, shall not be subject to clause 25(1)(a) of the Act, provided that, at the time of the trade:
(A) Genuity Canada is registered under the Act as a dealer in a category that would permit Genuity Canada to act as a dealer for the trade, in compliance with clause 25(1)(a) of the Act, if the trade were instead being made by Genuity Canada to a person or company resident in Ontario; and
(B) the registration of the relevant dual representative would permit the dual representative to act on behalf of Genuity Canada in respect of such trade, in compliance with clause 25(1)(a) of the Act, if the trade were instead being made by the dual representative on behalf of Genuity Canada to a person or company resident in Ontario.
"Paul K. Bates"