Appendix “A” Comment Table Multilateral Instrument 33-109 Registration Information Commentators Edward Jones Royal Bank of Canada Scotia Bank Management Group TD Bank Financial Group Friedberg Mercantile Group Category Comment 1. 33-109 Individuals should not have to report “non- Change of material” changes to registration information within Information 5 business days of the change. Non-material changes include changes to an individual’s personal description (for example, change of weight) and such address changes where a province or municipality has changed its name. 2. 33-109 How can a branch manager review a Form 33- Due Diligence 109F4 after the form is completed by an applicant but before it is sent to an AFR? Response Whether information is material depends on the circumstances. Therefore, registrants are required to notify staff of all changes to registration information within the same time frame because it is impossible to list all of the circumstances when such changes are material or immaterial. Note, however, that under subsection 4.1(2) individuals are required to any changes to their personal description within 1 year of the change rather than within 5 business days of the change. A firm may implement a variety of in-house procedures to address this matter. One possibility is to appoint the branch manager as the AFR to whom the applicant submits the application. After the branch manager has reviewed the application, the branch manager or another AFR can then submit it through NRD. An alternative may be to restrict a firm’s AFRs from making an NRD submission until the submission is first approved by the branch manager.
Category Comment 3. 33-109 How can a firm make reasonable efforts to Due Diligence determine whether an individual understands Form 33-109F4? The regulators should provide guidance as to what would constitute “reasonable efforts” to ensure that information submitted is true and complete. 4. Form 33- If an individual is reporting a change to his or her 109F5 registration information is that individual required Change of to submit a Form 33-109F5 in paper format Registration followed by a Form 33-109F4 in NRD format? Information Since the Form 33-109F4 will contain the change, why not just require the submission of the Form 33- 109F4 alone? Page 2 Response It is an offence for an individual to submit an application that is inaccurate. Having firms take reasonable efforts to determine whether an individual understands Form 33-109F4 provides staff with the comfort that the individual and his or her firm have turned their minds to ensuring that the information in the application is accurate. In general, reasonable due diligence procedures are based on industry standards and practices that develop and change as the industry continues to evolve. CSA staff are reluctant to provide a checklist of fixed practices that will become dated as more reasonable procedures are developed as a result of this continuing evolution. For these reasons it is best that industry be permitted to continually develop the due diligence procedures necessary to fulfil their obligations. Similar circumstances exist in connection with a registrant's due diligence obligations when signing a prospectus certificate. A Form 33-109F5 is required to be filed because it enables staff to easily identify the new information that is being submitted in the Form 33-109F4. Without it, staff would have to compare a previously submitted paper Form 4 with the newly filed electronic Form 33-109F4 in order to identify which information has changed. The use of the Form 33-109F5 helps streamline the review process to make it more effective and efficient.
Category Comment 5. Form 33- It is not necessary to ask for an individual’s 109F1 categories of registration on Form 33-109F1. Notice of Termination 6. Form 33- Only the NRD number of a branch should be 109F3 necessary when a firm provides notice of a branch Change of closing through NRD. Business Location 7. Form 33- Phrases like “and any other information that you 109F4 think is relevant” should be removed from question Registration 1(d) of Schedule I. If an applicant could provide Information for further information under this question that would an Individual accelerate the review of his application then the form should specifically request that information. If the form does not specifically request that information then failure to provide that information should not affect the speed of the approval process. 8. Form 33- The phrase “if applicable” should be added after the 109F4 word “below” in Item 8.2. Proficiency Page 3 Response CSA staff have removed this question from Form 33-109F1. On NRD, once a location’s NRD number is entered the remaining address information appears automatically so that an applicant can confirm that he or she is entering the right branch. From experience CSA staff know that in some circumstances an applicant’s answers to the questions on a schedule will prompt the regulator to ask for further information. The specifics of the request will depend on the information provided by the applicant. Under securities legislation, regulators are entitled to request such information whether or not the schedule contains the phrase that the commentator has suggested be removed (see, for example, section 31 of the Securities Act (Ontario)). CSA staff are of the view that the phrase does not create an obligation on applicants but merely invites them to provide further information, which might obviate the need for a regulator to request that information. On NRD, individuals who indicate that they are not required to provide proficiency information will navigate past Item 8.2. Individuals who are required to provide proficiency information will come to this item. CSA staff are of the view that it is not necessary to tell applicants that they are not required to provide a student number for an organization with which they do not have one.
Category Comment Response 9. Form 33- Why does Item 9 require an applicant to submit the On NRD, once a location’s NRD number is entered 109F4 business address of his or her location in addition to the remaining address information appears Location of the location’s NRD number? automatically so that an applicant can confirm that he Employment or she is entering the right branch. 10. Form 33- Item 12(a) should be amended to specify that CSA staff are of the view that the current draft of the 109F4 “industry standards of conduct” only refers to question is reasonable, and that the commentator’s Resignations standards to which the individual was subject at the suggestion would only add unnecessary complexity. and time of resignation or termination. Terminations 11. Form 33- Item 14(a) should be revised to require only CSA staff are of the view that a strict liability 109F4 criminal charges be disclosed “of which the standard is preferable. Note the due diligence Criminal individual has knowledge”. defence explicitly available under securities Disclosure legislation (see, for example, subsection 122(2) of the Securities Act (Ontario)). 12. Form 33- The “Certification of Firm” should be amended to CSA staff are of the view that firms should take a 109F4 read: more active role in the review of an individual’s Form Certification 33-109F4 than merely providing individuals with an The applicant was provided with an opportunity to discuss their forms. opportunity to discuss the questions in this application with an officer or branch manager of this firm. The undersigned authorized officer or partner further certifies on behalf of the sponsoring firm that the applicant will be engaged by the sponsoring firm as registered or approved. 13. 33-109 How will certification occur on NRD if NRD does Each form that can be filed through NRD contains Certification not accept signatures? two certification sections. One to be completed if the form is filed through NRD and the other to be completed if it is filed in paper. If the form is filed electronically only the AFR will make a certification. Page 4
Category Comment 14. 33-109 When a form is submitted in paper format, the filer Certification is required to make the following certification: “I also certify that all statements of fact made in the answers to the questions are true”. This certification should be qualified by adding “to the best of my knowledge and belief after making reasonable inquiries”. 15. 33-109 “Workable” definitions of branch and sub-branch Branch/Sub- should be provided. branch Page 5Response (Please refer to the forms for the language of this certification. Note that it does not require AFRs to certify that the contents of an individual’s application are true.) The CSA is of the view that a certification by an individual applicant is not necessary. An applicant is submitting his application to the regulator through an agent (the AFR). Whether or not an applicant submits the application through an agent and whether or not he or she certifies the application, the applicant is still subject to the offence provisions of securities legislation (see, for example, subsection 122(1) of the Securities Act (Ontario)). The CSA is of the view that the certification of an authorized officer of a firm is not necessary with an electronic submission given the sponsoring firm obligations under section 6.1 of Multilateral Instrument 33-109. This change is not necessary given the due diligence defence explicitly available under securities legislation (see, for example, subsection 122(2) of the Securities Act (Ontario)). The hallmark of a sub-branch is that the supervisor does not normally work out of that location. The Investment Dealers Association will not permit a sub-branch to have more than four registered representatives.
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