Securities Law & Instruments

Headnote

A decision amending and restating a ruling dated July 19, 2002 that was granted to TDWIS by the OSC to accommodate the establishment and operation of a broker call centre in London, Ontario for clients of TDWIS who are not residents of Canada, and to accommodate the proposed transfer of the TDWIS call centre support services from a TDWIS call centre located in San Diego, California to the London Call Centre.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 74(1), 144(1).

July 22, 2005

IN THE MATTER OF

THE SECURITIES ACT

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

AND

IN THE MATTER OF

TD WATERHOUSE INVESTOR SERVICES, INC.,

TD WATERHOUSE CANADIAN CALL CENTRE INC. AND

TD WATERHOUSE BANK, N.A.

 

RULING AND ORDER

(Subsections 74(1) and 144(1))

WHEREAS on July 19, 2002, the Ontario Securities Commission (the "Commission") made a ruling pursuant to subsection 74(1) of the Act (the "Original Ruling") that representatives (the "TDW Representatives") of TD Waterhouse Investor Services, Inc. ("TDW") who work in a call centre located in London, Ontario (the "London Call Centre") that is dedicated to answering inbound phone calls from clients of TDW who are not residents of Canada ("Non-Canadian Clients") or who are NI 35-101 Clients, as that term is defined below, are not subject to paragraph 25(1)(a) of the Act subject to certain terms and conditions.

AND WHEREAS TDW operates the London Call Centre through TD Waterhouse Canadian Call Centre Inc. ("TDWCCC), an affiliate of TDW that is incorporated under the laws of the Province of Ontario.

AND WHEREAS it is proposed to consolidate, and to thereby reduce the cost of conducting, TDW's call centre operations by transferring (the "Support Services Transfer") certain TDW call centre support services (the "Support Services") from a TDW call centre that is currently located in San Diego, California to the London Call Centre where the Support Services will become part of the TDW call centre platform that is currently operating within the London Call Centre.

AND WHEREAS The Toronto-Dominion Bank ("TDBank") operates two call centres located in Markham, Ontario and Edmonton, Alberta (the "TD Bank Call Centres").

AND WHEREAS employees of TD Bank located in the TD Bank Call Centres act as representatives of TD Waterhouse Bank, N.A. ("TDWBank") for the purpose of answering inbound phone calls from holders of TDWBank accounts who are resident in both the United States ("U.S. Customers") and Canada ("Canadian Customers") and who access the TD Bank Call Centres through the use of a toll-free line.

AND WHEREAS it is proposed to transfer the TD Bank Call Centres to the London Call Centre (the "Call Centre Transfer") for the purpose of improving customer service and reducing the costs associated with the operation of three distinct call centres by consolidating the three call centres into a single call centre and by having the TDW Representatives act as representatives for both TDW and TDWBank.

AND WHEREAS TDW wishes to vary the Original Ruling in order to extend its application to TDWCCC and to accommodate and reflect the Support Services Transfer and the Call Centre Transfer.

AND UPON the application of TDW, TDWCCC and TDWBank (collectively, the "Applicants") to the Commission for an order pursuant to subsections 144(1) and 74(1) of the Act (the "Application") revoking the Original Ruling and amending and restating it as set out below.

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

AND UPON the Applicants having represented to the Commission as follows:

1. TDW is a corporation incorporated under the laws of the State of New York, U.S.A. and is an indirect wholly-owned subsidiary of The Toronto-Dominion Bank ("TD Bank"), a bank listed on Schedule I of the Bank Act (Canada).

2. The head office of TDW is in New York, New York, U.S.A.

3. TDW is registered as a broker-dealer with the United States Securities and Exchange Commission ("SEC") pursuant to Section 15(b) of the Securities Exchange Act of 1934 as amended, to carry on business as a broker-dealer in the U.S.A.

4. TDWBank is chartered as a national bank under the United States National Bank Act. It is a virtual bank that carries on the business of banking in the United States. It is also an indirect wholly-owned subsidiary of TD Bank. Its head office is located in Jersey City, New Jersey, U.S.A.

5. TDW operates the London Call Centre through TDWCCC.

6. The London Call Centre is currently dedicated to responding to inbound phone calls from Non-Canadian Clients and individuals ("NI 35-101 Clients") referred to in section 2.1 of National Instrument 35-101 Conditional Exemption from Registration for United States Broker-Dealers and Agents ("NI 35-101"). Following the Support Services Transfer and the Call Centre Transfer, the London Call Centre will continue to respond to inbound phone calls from Non-Canadian Clients and NI 35-101 Clients. It will begin to provide the Support Services and it will begin responding to inbound phone calls from U.S. Customers and Canadian Customers.

7. TDW Representatives currently respond to market and account activity inquiries received from Non-Canadian Clients and NI 35-101 Clients and provide them with information on market activities and developments, TDW products and services, customer account information, technical support, Web access support and stock market quotes. TDW Representatives who are registered under U.S. securities laws may also accept and route, but not execute, trading orders on behalf of Non-Canadian Clients and NI 35-101 Clients.

8. Following the Support Services Transfer, TDW Representatives will also review for approval all Non-Canadian and NI 35-101 Client orders that are placed via the internet or a touch-tone telephone system, they will receive and respond to all email inquiries received by TDW, they will address technical problems encountered by Non-Canadian and NI 35-101 Clients when using electronic services that are available through TDW and they will monitor and supervise Non-Canadian and NI 35-101 Client accounts.

9. Following the Call Centre Transfer, TDW Representatives will also respond to account inquiries from, execute account transactions for, and offer a limited range of TDWBank financial products and services to, U.S. Customers and Canadian Customers. Financial products and services that will be available to U.S. Customers through the London Call Centre comprise U.S. certificates of deposit ("CDs"), U.S. interest bearing chequing accounts, overdraft protection, mortgages, a home equity line of credit, an unsecured line of credit and VISA credit cards. Financial products and services that will be available to Canadian Customers through the London Call Centre comprise CDs, U.S. interest bearing chequing accounts, overdraft protection, an unsecured line of credit and VISA credit cards.

10. TDW does not establish accounts for, or trade securities with, or on behalf of, persons or companies who are resident in Canada except to the extent that it establishes accounts and conducts trading in Canada in accordance with the dealer registration and prospectus exemptions that are available pursuant to NI 35-101.

11. Following the Support Services Transfer and the Call Centre Transfer, TDW Bank will not trade in securities with or on behalf of persons or companies who are resident in Canada save and except for CDs and U.S. interest bearing chequing accounts that will be made available to Canadian Customers in reliance upon exemptions from applicable dealer registration and prospectus requirements that have been granted to TDWBank by Canadian securities regulatory authorities.

12. The London Call Centre is, and will continue to be, operated in accordance with all applicable rules established by various U.S. regulatory authorities.

13. Within the London Call Centre, TDW's call centre operation is, and will continue to be, conducted in accordance with all applicable rules established by the SEC and the New York Stock Exchange ("NYSE") and it is, and will continue to be, subject to the same procedures that apply to TDW's existing U.S. business. TDW's call centre operation is, and will continue to be, examined at least annually by representatives from TDW's compliance staff in New York and it is, and will continue to be, supervised by one or more properly qualified individuals acceptable to the NYSE.

14. TDWBank is subject to regulation, examination and supervision by the Office of the Comptroller of the Currency, it's chartering agency, and the Federal Deposit Insurance Corporation, its deposit insurer.

15. TDW, TDWCCC, TDWBank and the TDW Representatives who work in the London Call Centre on behalf of TDW and TDW Bank will comply with all registration and other requirements of applicable U.S. securities legislation in respect of trades conducted with, or on behalf of, Non-Canadian Clients and U.S. Customers.

16. The London Call Centre will continue to be an opaque presence, inaccessible to any person or company other than Non-Canadian Clients, NI 35-101 Clients, U.S. Customers, Canadian Customers and persons or companies who direct email inquiries to TDW.

17. Without this Ruling and Order, TDW, TDWCCC, TDWBank and the TDW Representatives who work in the London Call Centre following the Support Services Transfer and the Call Centre Transfer may be unable to satisfy the registration requirements of paragraph 25(1)(a) of the Act.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS ORDERED, pursuant to subsection 144(1) of the Act, that the Original Ruling is revoked.

IT IS RULED pursuant to subsections 74(1) and 144(1) of the Act that:

(a) the TDW Representatives working in the London Call Centre shall not be subject to the requirements of paragraph 25(l)(a) of the Act where the TDW Representatives act on behalf of TDW or TDWBank in respect of trades in securities with or on behalf of Non-Canadian Clients or U.S. Customers, respectively, provided that the TDW Representatives comply with all registration and other requirements of applicable securities legislation in the U.S.A.; and

(b) each of TDW, TDWCCC and TDWBank shall not be subject to the requirements of paragraph 25(1)(a) of the Act with respect to trading conducted by it through the London Call Centre in securities with or on behalf of Non-Canadian Clients or U.S. Customers, respectively, provided that:

(i) a TDW Representative working in the London Call Centre acts on behalf of either TDW or TDWBank in respect of such trading; and

(ii) TDW and TDWBank comply with all registration and other requirements of applicable securities legislation in the U.S.A.

"Paul M. Moore"

"Harold P. Hands"