| THE SECURITIES ACT | ) |
Order No. 6813 |
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| Section
20(1) and National Instrument) 31-103 Registration Requirements And Exemptions |
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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 IIROC 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 (“IIROC”) members. The temporary relief was provided in anticipation of the finalization of the IIROC relationship disclosure information proposal (the “RDI 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 IIROC 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 IIROC members (the “RDI Order”). It was anticipated that the IIROC RDI Proposal would be finalized and new IIROC member rules reflecting the IIROC RDI 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 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”).
(F) 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.
(G) The implementation schedule for the IIROC RDI 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 IIROC is required to comply with section 14.2(1) of NI 31-103 on December 31, 2013, the date when the RDI 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 IIROC RDI Rule is implemented.
(I) Since the IIROC RDI Rule will come into effect on March 26, 2014 in respect of the provision of relationship disclosure information to existing clients, the cost that IIROC 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. S50, registered firms that are members of IIROC 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