Appendix “A” Comment Table Multilateral Instrument 31-102 National Registration Database Commentators Edward Jones Royal Bank of Canada Scotia Bank Management Group TD Bank Financial Group Friedberg Mercantile Group Category Comment Response 1. 31-102 • Launch of NRD should be later than The launch of NRD has been postponed until March Implementation November 25, 2002. 31, 2003. Date • Launch in spring of 2003. • A November launch is problematic because it conflicts with the increased workload of registration due to year-end registration renewals and staffing changes resulting from the RRSP season. 2. 31-102 • Question whether benefits of NRD to Based on the conclusions of the survey conducted by Fees industry would exceed the proposed the Chief Economist’s Office of the Ontario NRD user fees. Securities Commission, the CSA is of the view that • NRD fees will increase one over time most firms will realize significant benefits commentator’s costs related to from the implementation of NRD. registration by nearly 40% per year. The savings provided by the system will not offset this amount.
Category Comment 3. 31-102 • The CSA should reduce the proposed Fees NRD user fees by applying registration fees to pay for NRD. • The CSA should estimate the operational savings it expects to achieve with the implementation of NRD and use those savings to reduce the costs of NRD. 4. 31-102 The Help Manual (Filer Manual) is not Help Manual (Filer sufficiently user friendly and would be an Manual) inadequate guide for the day-to-day use of NRD. 5. 31-102 The CSA should indicate what registration Paper Filings documents will be filed in paper outside NRD. The CSA should eliminate such paper filings where possible. Page 2 Response NRD user fees and registration fees are used to cover distinct costs. NRD user fees cover the cost of NRD while registration fees cover the cost of ongoing regulator operations. If, following the implementation of NRD, a regulator realises a reduction in its operational costs and decides to pass those savings to industry, that should be done by reducing registration fees. The Help Manual (Filer Manual) is undergoing changes to become more user friendly. It will ultimately be much more user friendly in its on-line form than in its paper form. The NRD Help Manual (Filer Manual) provides a list of filings that will be required to be made in paper form. Please note that, on occasion, regulators may ask for additional paper documentation if further information is required about an individual. Because a request for specific additional documentation will be unique to the circumstances of each case, CSA staff cannot provide an itemized list of documents that may be requested. CSA staff are confident that such circumstances will be relatively limited. A primary aim of NRD is to limit paper filings. The current incarnation of NRD reduces paper filings significantly. Future versions of NRD will be designed to further reduce paper filings.
Category Comment 6. 31-102 A mutual reliance system should be Mutual Reliance implemented. This would permit an applicant’s jurisdiction of residence to approve applications on behalf of all jurisdictions. 7. 31-102 The CSA should ensure that the MFDA will use MFDA NRD. 8. 31-102 • NRD should allow an individual to Access to obtain his or her NRD number at any Information time without the assistance of the firm and without relying upon paper records. • It would help firms if they could, with the individual’s consent, access a potential employee’s NRD registration information. 9. 31-102 Firms would find it useful to be able to print an Permanent Record individual’s permanent record at any time in PDF. Page 3 Response The use of mutual reliance in other areas of securities regulation such as registration is being considered. While there is no formal mutual reliance registration system yet, NRD will provide many of the benefits of such a system by streamlining the submission and response process. Registrants will only have to file one set of documents once for all jurisdictions and the jurisdictions will share, maintain, and review one central set of registration records for individuals. NRD will act as a foundation for the regulators to create a formal mutual reliance registration system. Discussions are being undertaken with the MFDA about this matter. The MFDA's requirements have not been finalized. A future release may allow individuals to gain easier access to their own registration information. In the current release an individual who knows his or her NRD number would be able to provide it to an AFR at a firm to which the individual is considering transferring. Together with the AFR, the individual will be able to look at his or her registration information. An individual who has forgotten his or her NRD number and is unable to get it from the employer would be able to get it from a regulator. This function will be added to NRD prior to the launch of the system.
Category Comment 10. 31-102 • The CSA provide some training to firm Implementation representatives who could then train Communication other users in their respective firms. • The CSA should make resources available to answer technical questions that firms’ information technology staff might have. 11. 31-102 Please clarify the meaning of “unanticipated Temporary technical difficulties”. Could it, for example, Hardship include technical problems within a firm? 12. 31-102 • Registrants should not be responsible for Form 33-109F4 populating the NRD database. Since the Completion securities regulators currently maintain the registrant information that is required to be transferred to the NRD system, regulators should populate the NRD database with information from their own records. The registrant’s role should be limited to checking the accuracy of certain material data that the regulators have transferred. Page 4 Response The CSA is in the process of developing a training plan for NRD. This plan will be communicated to industry by year-end. The CSA has also launched a web site (www.nrd-info.ca) that will be regularly up-dated with information to assist firms to prepare for NRD. Circumstances may arise where a firm has technical difficulties that are sufficiently severe such that a firm or individual is unable to make timely submissions via NRD. CSA staff are of the view, however, that these circumstances will be extremely rare. CSA staff are confident that firms and individuals will be able to ascertain when such circumstances arise. Please note that a registrant’s access to NRD will not be confined to a specific computer or system as NRD is a web-based system. A registrant should be able to access NRD via an alternative computer or system in most circumstances. CSA staff understand the concerns expressed but maintain the view that firms are in the best position to provide up to date information on their registered and non-registered individuals. In the experience of CSA staff, some registrants have not been diligent about keeping regulators up to date with their registration information. Further, some registrants have only provided abbreviated forms (e.g. Form 4A) that do not contain all requisite information. CSA staff understand that Form 33-109F4 completion
Category Comment • Whether firms are required to submit completed Forms 33-109F4 within one year or within three years their resource requirements will be the same. It should be sufficient for this information to be inputted if an individual’s registration information changes or the individual transfers firms. 13. 31-102 Should an individual include prior registration Transition and category information upon submitting a Form Change of 33-109F4 under subsection 8.9(a) if the Registration regulator has already approved his or her Category change of category application? The individual must include his or her new category information in order to comply with section 8.10. Will the individual still have to input a Form 33-109F2, as required under section 8.9(b)? 14. 31-102 Will a transition firm be able to submit a Form Notice of 33-109F1 Notice of Termination for an Termination individual whose Form 33-109F4 has not been submitted? Page 5 Response is a significant undertaking. CSA staff are confident that the Form 33-109F4 completion process will be more easily managed over a three-year period rather than a one-year period as costs and other resources will be stretched out over a significantly longer time period. For example, strain on technological and management resources should be eased by a longer transition period. Form 33-109F4 completion is required for all registered and non-registered individuals to achieve the goal of ultimately eliminating paper-based systems for plain vanilla applications. If all relevant information is not stored on NRD, registrants and regulators alike will have to maintain two systems indefinitely. The instrument has been amended. If an individual’s change of category application is approved outside of the system during the freeze period, the individual will be required to submit a Form 33-109F4 reflecting the old category after the NRD Access Date. Within one business day of submitting the Form 33-109F4, the individual will be required to submit a Form 33-109F2 Change or Surrender of Individual Category application even though a paper application had previously been made. CSA staff expect few such situations to arise during the transition period. Yes. NRD will contain basic tombstone information about all registered individuals including an individual NRD number.
Category Comment 15. 31-102 It should be made clear that where identical Commodity filings would be required of a person or Futures company registered under both securities and Legislation commodity futures legislation, filing under the Multilateral Instrument would be deemed to constitute a filing under the applicable Ontario Securities Commission Rule and vice-versa. 16. 31-102 Does NRD have long-term viability in light of British Columbia recent regulatory initiatives calling for the Registration disbanding of the current registration structure Proposals altogether? Page 6Response The OSC Companion Policies have been amended to indicate that a requirement to make a submission under a Securities Act instrument will be satisfied if the identical submission is made under the Commodity Futures Act rule, and vice-versa.. One jurisdiction asked industry to comment on ideas for reforming the registration process. However, to date, no jurisdiction has implemented any proposal to do so. NRD will provide benefits for the present registration regime and therefore it is not prudent to delay the delivery of such benefits based on ideas that may or may not come to fruition.
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