Securities Law & Instruments

Headnote

Under the order, the applicant and other mutual funds dealers are exempted from the requirement in paragraph 13.2(2)(b) of National Instrument 31-103 to establish whether its clients are insiders of issuers.

Instruments Cited

National Instrument 31-103 Registration Requirements and Exemptions, s. 13.2(2)(b).

February 26, 2010

IN THE MATTER OF

NATIONAL INSTRUMENT 31-103

REGISTRATION REQUIREMENTS AND

EXEMPTIONS ("NI 31-103" or the "Instrument")

AND

SCOTIA SECURITIES INC. (the "Lead Filer") AND

OTHER MUTUAL FUND DEALERS REGISTERED AS OF

THE DATE OF THIS DECISION

DECISION

Interpretation

Unless otherwise defined in this decision or the context otherwise requires, terms used in this decision that are defined in NI 31-103 or National Instrument 14-101 Definitions have the same meaning.

Background

1. Paragraph 13.2(2)(b) of NI 31-103 provides that a registrant must take reasonable steps to establish whether a client is an insider of a reporting issuer or any other issuer whose securities are publicly traded.

2. The purpose of this requirement is to guard against abusive insider trading by, for example, allowing dealers to notify a client of the client's obligation to file an insider trade report.

3. If a registrant limits its trading with clients to mutual fund securities, only in very rare circumstances will a trade require the filing of an insider trade report.

Application

1. The Lead Filer has applied to the Director, under section 15.1 of NI 31-103, for exemptions for itself and each mutual fund dealer registered as of the date of this decision (together with the Lead Filer, the Filers or, individually, a Filer) from paragraph 13.2(2)(b) of NI 31-103, subject to the conditions and restrictions set out in this decision.

2. The Lead Filer represents that compliance with paragraph 13.2(2)(b) of NI 31-103 presents significant costs that are not justified when trading with a client is limited to certain securities.

Decision

The decision of the Director is that each Filer is exempt from paragraph 13.2(2)(b) of NI 31-103 so long as the Filer is not registered in any other category specified in section 7.1 of NI 31-103.

"Erez Blumberger"
Deputy Director, Registrant Regulation
Ontario Securities Commission