Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

September 29, 2010

Exempt Market Dealers Have Business Trigger

Canadian securities legislation creates two categories of securities that may be sold: 
(i) prospectus securities; and 
(ii) securities issued under prospectus exemption. 
Securities issued under the prospectus exemptions, otherwise known as non-reporting issuers, are typically considered to form the "exempt market". 
Under NI 31-103, a new dealer registration category is introduced in all jurisdictions across Canada to regulate the sale of securities in the exempt market - the exempt market dealer (EMD).
A critical change under NI 31-103 is the introduction of the "business trigger" for dealer registration. Prior to September 28, 2010, the requirement to be registered as a dealer is triggered by a person engaging in a "trade" of securities. With the new rules introduced in 31-103, the "trade trigger" is replaced with a "business trigger", so the dealer registration requirement will only apply to those whose trading in securities amounts to carrying on the business of trading in securities. Companion Policy 31-103CP provides guidance on what acts are deemed to be sufficient to trip the "business trigger".
NI 31-103 introduces consistent rules concerning proficiency, conduct, capital and compliance requirements and makes it clear that EMDs are subject to the same know-your-client ("KYC") and suitability requirements as other dealer categories.

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