1
CSA Staff Notice 31-335
Extension of Interim Relief for Members of the
Investment Industry Regulatory Organization of Canada from the Requirement
in section 14.2(1) of National Instrument 31-103 Registration Requirements,
Exemptions and Ongoing Registrant Obligations in Respect of the Provision of
Relationship Disclosure Information to Existing Clients
October 3, 2013
Introduction
All Canadian Securities Administrators (CSA) members have issued parallel orders that provide
a limited extension of previously issued interim relief from the requirement to provide
relationship disclosure information (RDI) prescribed by section 14.2(1) of National Instrument
31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103)
for firms that are members of the Investment Industry Regulatory Organization of Canada
(IIROC). The relief has been extended to March 26, 2014 in respect of the provision of RDI to
existing clients only (i.e. clients that were clients of the firm before March 26, 2013).
Relief
Section 14.2(1) of NI 31-103 sets out the principle that a registered firm must deliver to a client
all information that a reasonable investor would consider important about the client’s
relationship with the registrant.
As announced in CSA Staff Notice 31-329 issued on September 28, 2011, all CSA members
issued parallel orders that exempted firms that are members of IIROC from the application of the
requirement of section 14.2(1) of NI 31-103, provided that after the IIROC RDI rules are
approved, the IIROC member complies with them, subject to applicable transition periods. The
orders were set to expire on December 31, 2013, by which time the IIROC RDI rules were
expected to be fully implemented.
On March 26, 2012, IIROC announced in IIROC Notice 12-0107 Client Relationship Model –
Implementation the implementation of, among other things, new IIROC Dealer Member Rule
3500 – Relationship disclosure (the IIROC RDI Rule). The IIROC RDI Rule sets out detailed
requirements to assist registered firms who are IIROC members to comply with the general
principle in section 14.2(1) of NI 31-103.
The implementation schedule for the IIROC RDI Rule provided that the provision of RDI to: (i)
new clients be given a one year transition period, with an effective implementation date of March
26, 2013, and (ii) existing clients be given a two year transition period, with an implementation
date of March 26, 2014.
Since the IIROC RDI Rule will not come into effect until March 26, 2014 in respect of the
provision of RDI to existing clients, all CSA members have issued parallel orders that exempt
registered firms that are members of IIROC from the application of the requirements of section
14.2(1) of NI 31-103 in respect of the provision of RDI to their clients that were clients of the
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firm before March 26, 2013. The orders will come into effect on December 31, 2013 and will
expire on March 26, 2014, by which time the IIROC RDI Rule will be fully implemented.
We are publishing the orders with this Notice. The orders are also available on websites of CSA
members, including:
www.lautorite.qc.ca
www.albertasecurities.com
www.bcsc.bc.ca
www.msc.gov.mb.ca
www.gov.ns.ca/nssc
www.nbsc-cvmnb.ca
www.osc.gov.on.ca
www.sfsc.gov.sk.ca
Questions
If you have questions regarding this Notice or the orders please direct them to any of the
following:
Christopher Jepson
Brian W. Murphy
Senior Legal Counsel
Deputy Director, Capital Markets
Compliance and Registrant Regulation
Nova Scotia Securities Commission
Ontario Securities Commission
902-424-4592
416-593-2379
murphybw@gov.ns.ca
cjepson@osc.gov.on.ca
Gérard Chagnon
Jason L. Alcorn
Analyste expert en réglementation
Legal Counsel, Securities
Direction des pratiques de distribution et
Financial and Consumer Services
des OAR
Commission (New Brunswick)
Autorité des marchés financiers
506-643-7857
418-525-0337, ext 4815
jason.alcorn@fcnb.ca
1-877-525-0337
gerard.chagnon@lautorite.qc.ca
Kate Lioubar
Katharine Tummon
Senior Legal Counsel
Director
Capital Markets Regulation
Office of the Superintendent
British Columbia Securities Commission
of Securities, P.E.I.
604-899-6628 and
902-368-4542
1-800-373-6393
kptummon@gov.pe.ca
klioubar@bcsc.bc.ca
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Navdeep Gill
Craig Whalen
Manager, Registration
Manager of Licensing, Registration and
Alberta Securities Commission
Compliance
403-355-9043
Office of the Superintendent of Securities
navdeep.gill@asc.ca
Government of Newfoundland and
Labrador
709-729-5661
cwhalen@gov.nl.ca
Dean Murrison
Louis Arki
Director, Securities Division
Director, Legal Registries
Financial and Consumer Affairs Authority
Department of Justice, Government of
of Saskatchewan
Nunavut
306-787-5842
867-975-6587
dean.murrison@gov.sk.ca
larki@gov.nu.ca
Chris Besko
Rhonda Horte
Deputy Director, Legal Counsel
Deputy Superintendent
The Manitoba Securities Commission
Office of the Yukon Superintendent
204-945-2561 and 1-800-655-5244
of Securities
(Toll Free (Manitoba only))
867-667-5466
chris.besko@gov.mb.ca
rhonda.horte@gov.yk.ca
Carla Buchanan
Donn MacDougall
Compliance Auditor
Deputy Superintendent, Legal &
The Manitoba Securities Commission
Enforcement
204-945-2561 and 1-800-655-5244
Office of the Superintendent of Securities
(Toll Free (Manitoba only))
Government of the Northwest Territories
carla.buchanan@gov.mb.ca
Tel: 867-920-8984
donald.macdougall@gov.nt.ca
THE MANITOBA.
THE SECURITIES ACT
)
Order No. 6813
SECURITIES
)
COMMISSION
Section 20(1) and National Instrument)
31-103 Registration Requirements
)
And Exemptions
)
October 3, 2013
Transitional relief from the requirement to provide the relationship
disclosure information prescribed by section 14.2(1) of NI 31-103
for llROC member firms
BLANKET ORDER 31-514
INTERPRETATION
Unless otherwise defined in this decision or the context otherwise requires, terms
used in this decision that are defined in National Instrument 31-103 Registration
Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103") or
National Instrument 14-101 Definitions have the same meaning.
WHEREAS:
(A)
Under section 14.2(1) [relationship disclosure information] of NI 31-103,
a registered firm must deliver to a client all information that a reasonable investor
would consider important about the client's relationship with the registrant.
(B)
Under section 16.14 of NI 31-103, section 14.2 of NI 31-103 did not
apply until September 28, 2010 to persons or companies that were registered on
September 28, 2009.
(C)
On September 10, 2010, the commission issued Blanket Order 31-514,
providing temporary relief from the application of section 14.2(1) of NI 31-103 until
September 28, 2011 to Investment Industry Regulatory Organization of Canada
("llROC")
members. The temporary relief was provided
in
anticipation of the
finalization of the llROC relationship disclosure information proposal (the "ROI
Proposal").
(D)
On September 23, 2011, the commission issued Commission Order
No.
6400
Transitional relief from
the requirement to provide the
relationship
disclosure information prescribed by section 14.2(1) of NI 31-103 for I/ROG member
firms Blanket Order 31-514, providing further temporary relief from the application of
section 14.2(1) of NI 31-103 until December 31, 2013 to llROC members (the "ROI
Order"). It was anticipated that the llROC ROI Proposal would be finalized and new
llROC member rules reflecting the llROC ROI Proposal would be approved before
the end of 2011 with provisions for their implementation in phases over a two-year
transition period .
(E)
On March 26, 2012, the llROC announced in llROC Notice 12-0107
500-4{)0 St. lt,.fary Av-emit:', Winnipl.'J.:, ManiWb.a RJC 4KS tel : (Zl.1-1) Q45 .2548 fax: (204) Q4S .03JO "-ww.msc.~ov.mb.rn
2
Client Relationship Model -
Implementation the implementation of, among other
things , new llROC Dealer Member Rule 3500 -
Relationship disclosure (the "llROC
ROI Rule").
(F)
The llROC ROI Rule sets out detailed requirements to assist registered
firms who are llROC members to comply with the general principle in section 14.2(1)
of NI 31 -103.
(G)
The implementation schedule for the llROC ROI Rule provided that the
provision of relationship disclosure information to: (i) new clients be given a one year
transition period , with an effective implementation date of March 26 , 2013, and (ii)
existing clients be given a two year transition period , with an implementation date of
March 26, 2014.
(H)
If a registered firm that is a member of llROC is required to comply
with section 14.2(1) of NI 31-103 on December 31 , 2013, the date when the ROI
Order expires, it will
be
required
to
prepare
detailed
relationship
disclosure
information for its existing clients and may incur significant costs changing its
relationship disclosure communications with existing clients when the llROC ROI
Rule is implemented.
(I)
Since the llROC ROI Rule will come into effect on March 26, 2014 in
respect of the provision of relationship disclosure information to existing clients , the
cost that llROC members will incur by having to comply with section 14.2(1) of NI
31-103 on December 31 , 2013 in the interim is not justified .
IT IS ORDERED:
1.
THAT under s. 20(1) of The Securities Act, R.S.M. 1988, c. 850,
registered firms that are members of llROC are exempt from section 14.2(1) of NI
31-103 in respect of the provision of relationship disclosure information to their
clients that were clients of the firm before March 26, 2013.
2.
THAT this order comes into effect on December 31 , 2013 and expires
on March 26, 2014.
BY ORDER OF THE COMMISSION
Deputy Director
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.