Amendment of Decision in the Matter of National Instrument 31-103 Registration Requirements and Exemptions and Crosbie & Company Inc. and Certain Other Limited Market Dealers that have become Exempt Market Dealers under Subsection 16.3(2) of NI 31-103.
Ontario Director's Decision issued coincident with the coming into force of NI 31-103 on September 28, 2009 provided former limited market dealers automatically continued into new exempt market dealer (EMD) category with transitional relief from financial reporting and client statement requirements in ss. 12.12 and 14.14. Decision amended to correct a drafting oversight that would have prevented such EMDs from relying on the order if they were also former international advisers automatically continued into the portfolio manager category.
February 19, 2010
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
IN THE MATTER OF
NATIONAL INSTRUMENT 31-103
AND EXEMPTIONS (NI 31-103) AND
CROSBIE & COMPANY INC. AND
CERTAIN OTHER LIMITED MARKET DEALERS
THAT HAVE BECOME EXEMPT MARKET DEALERS
UNDER SUBSECTION 16.3(2) OF NI 31-103
AMENDMENT OF DECISION
Unless otherwise defined in this decision or the context otherwise requires, terms used in this decision that are defined in NI 31-103 have the same meaning, and other terms used in this decision that are defined in National Instrument 14-101 Definitions or Multilateral Instrument 11-102 Passport System (MI 11-102) have the same meaning.
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):
(a) the Ontario Securities Commission (the Commission) is the principal regulator for this application, and
(b) the Filer has provided notice that section 4.7(1) of MI 11-102 is intended to be relied upon in Newfoundland and Labrador.
1. On September 28, 2009 (the Effective Date), co-incident with the coming into force of National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103), a Director's Decision was issued in the matter of NI 31-103 and Crosbie & Company Inc. and Certain Other Limited Market Dealers that have become Exempt Market Dealers under subsection 16.3(2) of NI 31-103 (the Decision).
2. The Decision provided certain temporary relief from financial reporting and client statement requirements to persons or companies that were registered in Ontario and Newfoundland and Labrador as limited market dealers (LMDs) immediately before the coming into force of NI 31-103 and, upon its coming into force, automatically became registered as exempt market dealers (such former LMDs referred to in the Decision as "mapped-over EMDs").
3. The Decision was issued with respect to mapped-over EMDs because they had not been subject to financial statement filing requirements or capital requirements prior to the coming into force of NI 31-103 unless they were also registered in certain other categories.
4. The relief granted by the Decision is intended to provide a reasonable transition period for the application of financial reporting and client statement requirements to mapped-over EMDs that had not previously had to build systems to deliver this information to regulators and clients. Other categories of registrant generally were already subject to financial reporting and client statement requirements before the coming into force of NI 31-103. Consequently, the relief in the Decision is only available to mapped-over EMDs that are not also registered in another category, except that the relief with respect to client statements is available to a mapped-over EMD that is also a "mapped-over MFD" or as investment fund manager (because NI 31-103 includes related exemptions for mapped-over MFDs and investment fund managers).
5. The Decision failed to contemplate the case of mapped-over EMDs who had also been registered in the category of international adviser (IA) before the coming into force of NI 31-103. Like LMDs, IAs were not subject to financial reporting or client statement requirements. The IA registration category was not continued under NI 31-103 and, upon the Effective Date, IAs automatically became registered as portfolio managers subject to certain terms and conditions (such former IAs referred to in this amending decision as "PM-IAs").
Amendment of Decision
The Decision Maker is satisfied that the amendment of the Decision meets the test set out in the securities legislation (the Legislation) of the Jurisdiction for the Decision Maker to make the decision.
The decision of the Decision Maker under the Legislation is that, since it would be inconsistent with the purpose of the Decision if mapped-over EMDs could not rely upon the relief granted under it solely because they are also PM-IAs, the Decision is amended by the addition of the underlined words:
1. each Filer is exempt from the Financial Statement Requirement provided that it is not registered in any other category of registration in Ontario or Newfoundland and Labrador except as a PM-IA; and
2. each Filer is exempt from the Client Statement Requirement provided that it is not registered in any other category of registration in Ontario or Newfoundland and Labrador except as a mapped-over MFD or an investment fund manager or a PM-IA.
This decision with respect to the Financial Statement Requirement will expire one year after the Effective Date.
This decision with respect to the Client Statement Requirement will expire two years after the Effective Date.