Securities Law & Instruments

 


NATIONAL INSTRUMENT 33-101

ADMINISTRATION OF SELF-DIRECTED RRSPS, RESPS AND RRIFS BY DEALERS

TABLE OF CONTENTS

PART TITLE

PART 1 DEFINITIONS AND INTERPRETATION

1.1 Definitions

1.2 Interpretation

PART 2 CONDITIONS OF ADMINISTRATION

2.1 Conditions of Administration

PART 3 EXEMPTION

3.1 Exemption

NATIONAL INSTRUMENT 33-101

ADMINISTRATION OF SELF-DIRECTED RRSPS, RESPS AND RRIFS BY DEALERS(1)

PART 1 DEFINITIONS AND INTERPRETATION(2)

1.1 Definitions - In this Instrument

"acceptable institutions(3)" has the same meaning as in the Joint Regulatory Financial Questionnaire and Report;

"acceptable securities location3" has the same meaning as in the Joint Regulatory Financial Questionnaire and Report;

"Joint Regulatory Financial Questionnaire and Report" means the Joint Regulatory Financial Questionnaire and Report forming part of the by-laws of TheToronto Stock Exchange on [insert the effective date] and every successor to the form that does not materially lessen the requirements for an entity to qualify asan acceptable securities location or acceptable institution;

"plan" means a self-directed RRSP, self-directed RESP or self-directed RRIF;

"planholder" means the registered holder of a plan;

"RRSP(4)" has the same meaning as ascribed to "registered retirement savings plan" under the ITA(5);

"RESP(6)" has the same meaning as ascribed to "registered education savings plan" under the ITA; and

"RRIF(7)" has the same meaning as ascribed to "registered retirement income fund" under the ITA.

1.2 Interpretation - Despite the definition of "Joint Regulatory Financial Questionnaire and Report" in section 1.1, in British Columbia "Joint RegulatoryFinancial Questionnaire and Report" has the same meaning as ascribed to that term in securities legislation.

PART 2 CONDITIONS OF ADMINISTRATION

2.1 Conditions of Administration - A registered dealer(8) shall not administer a plan(9) unless the following criteria are met:

1. The trustee of the plan is an acceptable institution.

2. The dealer does not enter into an agreement under which any person or company, other than the trustee, is primarily liable to the planholder for breach of trustunder3. The dealer designates an employee as responsible for maintaining physical control over plan securities held at the dealer.

4. A designated responsible employee maintains physical control over plan securities held at the dealer.

5. The dealer maintains plan securities in safekeeping at an acceptable securities location either separately for a plan or in bulk segregation and, if the dealer is amember of a depository that is an acceptable securities location, maintains plan securities eligible to be held at the depository in safekeeping at the depository.

6. The dealer identifies the plan securities as being held by it on behalf of a planholder in its securities position record and customers' ledger, and in eachstatement of account provided by the dealer to the planholder and the trustee.

7. The dealer enters into a safekeeping agreement with each custodian holding plan securities that provides that plan securities held under the safekeepingagreement may only be released on the instructions of the planholder or the trustee.

8. At least twice a week the dealer

(a) reviews its accounts to determine the securities required to be segregated under the regulations; and

(b) segregates the securities.

9. The dealer implements a means, numerical or otherwise, to identify plan accounts that is distinguishable from the means used by the dealer to identify otheraccounts.

10. The dealer identifies each plan account by the means to identify plan accounts implemented by the dealer under paragraph 9.

11. The dealer identifies each plan account as being registered in the name of the trustee in trust for the named planholder.

12. The dealer records each plan account in a separate section of the dealer's customer account records specifically identified for plan accounts.

13. Within one business day(10) after receipt by the dealer, the dealer transfers to the trustee all cash received by the dealer for a plan account.

14. Despite paragraph 13, the dealer transfers to the trustee all cash received by the dealer for a plan account that is required or received for settlement of a tradein securities on the settlement or value date specified in the confirmation of trade for the trade.

15. The dealer enters into an agreement with the trustee that the dealer may not use assets from any plan account to set-off or pay a claim of the dealer againstthe planholder other than administration fees for or expenses of the plan account.

16. If the plan is subject to investment restrictions under the ITA, the dealer advises the planholder in writing that there are consequences under the ITA on theacquisition or holding of non-qualified investments and the dealer notifies each planholder on a monthly basis if a non-qualified investment has been acquired or isbeing held in the planholder's plan or if any previously acquired qualified investment is then an unqualified investment.

17. Prior to relying on this National Instrument the dealer provides evidence to the securities regulatory authority(11) from each regulatory authority havingjurisdiction over the trustee of the plan that the regulatory authority has received all documentation requested by the regulatory authority from the trustee.

18. Prior to relying on this National Instrument the dealer provides evidence to the securities regulatory authority of approval to the dealer acting as anadministrator of the plan from each self-regulatory organization(12) of which the dealer is a member.

19. If the dealer is required to contribute to CIPF(13), prior to relying on this National Instrument the dealer notifies CIPF of the dealer's intention to act as anadministrator of a plan.(14)

PART 3 EXEMPTION

3.1 Exemption

(1) The regulator(15) or the securities regulatory authority may grant an exemption to this Instrument, in whole or in part, subject to such conditions orrestrictions as may be imposed in the exemption.

(2) Despite subsection (1), in Ontario, only the regulator may grant such an exemption.

1. The proposed National Instrument is an initiative of the Canadian Securities Administrators (the "CSA") and is expected to be adopted as a rule in BritishColumbia, Alberta, Ontario and Nova Scotia, as a Commission regulation in Saskatchewan and as a policy in all other jurisdictions represented by the CSA. Thisproposed National Instrument is derived from Local Policy Statement 3-33 of the B.C. Securities Commission and from OSC Policy Statement No. 4.3 ("OSCPolicy 4.3"). This proposed National Instrument was initially proposed to be an Ontario local rule. However, the other Canadian securities regulatory authoritiesdetermined to adopt it nationally.

2. A national definition instrument has been adopted as National Instrument 14-101 Definitions. It contains definitions of terms used in more than one nationalinstrument. National Instrument 14-101 also provides that a term used in a national instrument and defined in the statute relating to securities of the applicablejurisdiction, the definition of which is not restricted to a specific portion of the statute, will have the meaning given to it in the statute relating to securities of thatjurisdiction. National Instrument 14-101 also provides that a provision in a national instrument that specifically refers by name to a jurisdiction, other than thelocal jurisdiction, shall not have any effect in the local jurisdiction, unless otherwise stated in the provision.

3. In 1993-1994 the capital rules of The Toronto Stock Exchange and the Investment Dealers Association of Canada contained in the Joint RegulatoryFinancial Questionnaire and Report were amended to require members to hold securities and cash for plan accounts at acceptable institutions and acceptablesecurities locations. These institutions and locations were selected based on size and the nature of the regulatory oversight to which the institution was subject.The National Instrument modifies the predecessor policies to reflect the changes.

4. This definition may be moved to the National Instrument 14-101 Definitions.

5. The term ITA is defined in National Instrument 14-101 Definitions. The definition is: "ITA means the Income Tax Act (Canada)".

6. This definition may be moved to National Instrument 14-101 Definitions.

7. This definition may be moved to National Instrument 14-101 Definitions.

8. The proposed National Instrument expands the application of both BCSC Local Policy Statement 3-33 and OSC Policy 4.3 in that it applies to all categoriesof dealers that administer RRSPs, RESPs or RRIFs.

9. The proposed National Instrument expands the application of both BCSC Local Policy Statement 3-33 and OSC Policy 4.3 in that it also applies toself-directed RESPs and RRIFs, whereas the policies only covered self-directed RRSPs.

10. The term "business day" will be defined locally. In Ontario, the definition is set out in Rule 14-501 Definitions. The definition is: "business day means anyday other than a Saturday, Sunday or statutory holiday".

11. The term "securities regulatory authority" is defined in National Instrument 14-101 Definitions as meaning, for a local jurisdiction, the securitiescommission or similar regulatory authority set out in an appendix to that instrument opposite the name of the local jurisdiction. The term "local jurisdiction" isdefined in National Instrument 14-101 Definitions as meaning, in a national instrument adopted or made by a Canadian securities regulatory authority, thejurisdiction in which the Canadian securities regulatory authority is situate.

12. This section has not been restricted to recognized self-regulatory organizations as it is intended to ensure that a member of a self-regulatory organization isnot undertaking an activity in non-compliance with the requirements of an organization of which it is a member.

13. "CIPF" is defined in National Instrument 14-101 Definitions. The definition is: "CIPF means the Canadian Investor Protection Fund".

14. The requirement of "double segregation" of securities held for self-directed RRSP accounts contained in both BCSC Local Policy Statement 3-33 and inOSC Policy 4.3 has been deleted. (This is consistent with a determination made by the Ontario Securities Commission in 1994 that a dealer should not berequired to maintain two separate segregation accounts for each client with both a plan account and a non-plan account.).

15. The term "regulator" is defined in National Instrument 14-101 Definitions as meaning, in a local jurisdiction, the official described in an appendix to thatinstrument opposite the name of the local jurisdiction.