Securities Law & Instruments

Headnote

Decision pursuant to section 3.1 of OSC Rule 31-501 Registrant Relationships (the Rule), that the temporary employment of salespersons by the applicant is exempt from subsection 1.1(1) of the Rule, subject to the terms and conditions set out in the Order.

Rule Cited

OSC Rule 31-501 Registrant Relationships.

IN THE MATTER OF

ONTARIO SECURITIES COMMISSION

RULE 31-501 (the Rule)

MADE UNDER THE SECURITIES ACT,

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

AND

IN THE MATTER OF

SHORCAN ATS LIMITED

 

ORDER

(Section 3.1 of the Rule)

UPON the application of Shorcan ATS Limited (the Applicant) to the Director under the Act for an exemption pursuant to section 3.1 of the Rule, exempting the registered salespersons employed by Shorcan Brokers Limited (Shorcan Brokers), an affiliate of the Applicant, from subsection 1.1(1) of the Rule, to allow the Applicant to employ temporarily those salespersons employed by Shorcan Brokers (the Application);

AND UPON considering the application;

AND UPON the Applicant having represented to the Director that:

1. The Applicant is a member of the Investment Dealers Association of Canada (IDA) and is a registrant under the Act in the category of investment dealer.

2. Shorcan Brokers is a registrant under the Act in the category of limited market dealer.

3. The Applicant anticipates that as a new business it will experience a start-up period prior to achieving full-scale operations during which period it may, from time to time, not have a sufficient number of experienced registered salespersons in its employ to conduct its operations in an effective and efficient manner.

4. To service its clients, the Applicant seeks to employ, on a temporary basis only, salespersons (Temporary Salespersons) who are already employed by, and registered with, Shorcan Brokers, and intends to make application for registration with the IDA on behalf of the Temporary Salespersons to be concurrently registered with the Applicant.

5. The Applicant is prohibited from employing the Temporary Salespersons pursuant to subsection 1.1(1) of the Rule, which expressly prohibits a registered salesperson from acting or being registered as a salesperson with another registrant without an exemption.

6. The Applicant and Shorcan Brokers operate in different product areas of the securities business. The Applicant will be operating as an alternative trading system trading in Toronto Stock Exchange listed equity securities and Shorcan Brokers operates as an inter-dealer broker in the fixed income market.

7. The Applicant and Shorcan Brokers customers deal with different individuals within each entity. Shorcan Brokers conducts business with fixed income traders and the Applicant conducts business with equity traders.

8. Each Temporary Salesperson will

(a) preserve the confidentiality of information in relation to the clients of the Applicant and Shorcan Brokers

(b) be prohibited from using information in relation to the clients of the Applicant while working for Shorcan Brokers; and

(c) be prohibited from using information in relation to the clients of Shorcan Brokers while working for the Applicant.

9. The Applicant and Shorcan Brokers will implement policies and procedures

(a) to preserve the confidentiality of client information;

(b) to ensure the actions of the Temporary Salespersons are in compliance with the terms and conditions of this order and Ontario securities law; and

(c) to disclose fully to their respective customers those salespersons/registered representatives (non-retail) who are registered with both firms.

10. Each Temporary Salesperson will be registered as a registered representative of both the Applicant and Shorcan Brokers in accordance with applicable IDA registration requirements and the registration requirements of the Act and Regulations and Rules made under the Act.

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

IT IS ORDERED, pursuant to section 3.1 of the Rule, that the employment of Temporary Salespersons by the Applicant and, concurrently, Shorcan Brokers is exempt from subsection 1.1(1) of the Rule, provided that:

1. The Temporary Salespersons

(a) will preserve the confidentiality of information in relation to the clients of the Applicant and Shorcan Brokers;

(b) are prohibited from using information in relation to the clients of the Applicant while working for Shorcan Brokers; and

(c) are prohibited from using information in relation to the clients of Shorcan Brokers while working for the Applicant.

2. The Applicant and Shorcan Brokers will each implement policies and procedures to ensure:

(a) the preservation of the confidentiality of client information;

(b) the actions of the Temporary Salespersons are in compliance with the terms and conditions of this order and Ontario securities law; and

(c) that both the Applicant and Shorcan Brokers disclose fully to their respective customers those Temporary Salespersons who are registered with both firms.

3. The relief provided in this order will expire on September 30, 2007.

September 1, 2006

"Donna Leitch"