Securities Law & Instruments



NATIONAL INSTRUMENT 33-102

REGISTRANT DEALINGS WITH CLIENTS
TABLE OF CONTENTS
PART                      TITLE

 

Part 1 DEFINITIONS
1.1 Definitions

 

Part 2 DISCLOSURE
2.1 Leverage Disclosure
2.2 Exemption for Margin Accounts

 

Part 3 DISCLOSURE OF CONFIDENTIAL RETAIL CLIENT INFORMATION
3.1 Consent Required
3.2 Prohibition to Require Consent as a Condition

 

Part 4 SETTLING SECURITIES TRANSACTIONS
4.1 Settling Securities Transactions

 

Part 5 TIED SELLING
5.1 Tied Selling

 

Part 6 DISTRIBUTION OF SECURITIES IN A FINANCIAL INSTITUTION
6.1 Application of Part 6
6.2 Disclosure
6.3 Disclosure in Promotional Material

 

Part 7 EXEMPTION
7.1 Exemption
NATIONAL INSTRUMENT
33-102
REGISTRANT DEALINGS WITH CLIENTS

PART 1 DEFINITIONS

1.1 Definitions

(1) In this Instrument, "recognized SRO" means an SRO that is recognized as a self-regulatoryorganization by a Canadian securities regulatory authority.

(2) In this Instrument, "retail client" means

a) an individual unless the individual has a net worth exceeding $5 million, or

b) a person or company, other than an individual, unless the person or company has totalassets or annual revenues exceeding $10 million

but does not include

i) a Canadian financial institution

ii) a person or company registered under Canadian securities legislation.

PART 2 DISCLOSURE

2.1 Leverage Disclosure

(1) If a registrant opens an account for a retail client or if a registrant makes a recommendationto a retail client for purchasing securities by leveraging, or otherwise becomes aware of aretail client's intent to employ leveraged monies for the purpose of investment, the registrantshall provide to the retail client, before the retail client purchases securities by leveraging,a written disclosure statement in substantially the following words:

 

Using borrowed money to finance the purchase of securities involves greater riskthan a purchase using cash resources only. Should you borrow money to purchasesecurities, your responsibility to repay the loan as required by its terms remains thesame even if the value of the securities purchased declines.

(2) Before executing an order on behalf of a retail client purchasing securities by leveraging, theregistrant shall obtain an acknowledgement from the retail client that specifically refers tothe written disclosure statement required by subsection (1) and confirms that the retail clienthas read the written disclosure statement.

(3) A registrant is not required to comply with subsections (1) and (2) if:

(a) the registrant has provided the written disclosure statement required by subsection(1) to the retail client within the six month period prior to making therecommendation for purchasing securities by leveraging, or otherwise becomingaware of a retail client's intent to employ leveraged monies for the purpose ofinvestment, or

(b) the registrant is subject to and complies with the leverage disclosure rules of arecognized SRO.

2.2 Exemption for Margin Accounts - Section 2.1 does not apply to purchases of securities bya retail client on margin if the client's margin account is maintained with a registrant that isa member of a recognized SRO and the margin account is operated in accordance with therules of the recognized SRO.

PART 3 DISCLOSURE OF CONFIDENTIAL RETAIL CLIENT INFORMATION

3.1 Consent Required - A registrant shall hold all information about a retail client confidentialand shall not disclose the information to any third party, except as required by law or therules of a recognized SRO, unless, prior to disclosing the information,

(a) the registrant informs the retail client to whom the information pertains:

(i) of the name of the third party to which the information will be disclosed,

(ii) of the relationship between the registrant and the third party,

(iii) of the nature of the information that will be disclosed,

(iv) of the intended use of the information by the third party, including whetherthe third party will disclose the information to others,

(v) of the right of the retail client to revoke the consent referred to in paragraph(b), and the effect of the revocation, and

(vi) that the retail client's consent under paragraph (b) is not required as acondition of the registrant dealing with the retail client, except incircumstances described in section 3.2; and

(b) the retail client consents to the disclosure of the confidential client information.

3.2 Prohibition to Require Consent as a Condition - No registrant shall require a retail clientto consent to the registrant disclosing confidential information regarding the retail client asa condition, or on terms that would appear to a reasonable person to be a condition, ofsupplying products or services, unless the disclosure of the information is reasonablynecessary to provide a specific product or service that the retail client has requested.

PART 4 SETTLING SECURITIES TRANSACTIONS

4.1 Settling Securities Transactions - No registrant shall require a person or company to settlethat person or company's account with the registrant through that person or company'saccount at a Canadian financial institution as a condition, or on terms that would appear toa reasonable person to be a condition, of supplying products or services, unless this methodof settlement is reasonably necessary to provide a specific product or service that the personor company has requested.

PART 5 TIED SELLING

5.1 Tied Selling - No person or company shall require another person or company

(a) to invest in particular securities, either as a condition or on terms that would appearto a reasonable person to be a condition, of supplying or continuing to supplyproducts or services; or

(b) to purchase or use any products or services, either as a condition or on terms thatwould appear to a reasonable person to be a condition, of selling particular securities.

PART 6 DISTRIBUTION OF SECURITIES IN A FINANCIAL INSTITUTION

6.1 Application of Part 6 - This Part applies only to registrants conducting securities relatedactivities in an office or branch of a Canadian financial institution.

6.2 Disclosure

(1) If a registrant opens an account for a retail client, a registrant shall provide a writtendisclosure statement that the registrant is a separate entity from the Canadian financialinstitution and, unless otherwise advised by the registrant, securities purchased from orthrough the registrant

(a) are not insured by a government deposit insurer,

(b) are not guaranteed by a Canadian financial institution, and

(c) may fluctuate in value.

(2) At the time that the account is opened, the registrant shall obtain an acknowledgement fromthe retail client that specifically refers to the written disclosure statement required bysubsection (1) and confirms that the retail client has read the written disclosure statement.

6.3 Disclosure in Promotional Material - A registrant shall include a written statement thatcontains the information referred to in section 2.1 and section 6.2 of this Instrument in theregistrant's promotional material that is distributed by or displayed in an office or branch ofa Canadian financial institution.

PART 7 EXEMPTION

7.1 Exemption

(1) The regulator or the securities regulatory authority may grant an exemption to thisInstrument, in whole or in part, subject to such conditions or restrictions as may be imposedin the exemption.

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