Client Focused Reforms, Trusted Contact Persons/​Temporary Holds: December 31, 2021 Effective Date for Conforming Changes to MFDA Regulatory Instruments

The Canadian Securities Administrators (CSA) has adopted Client Focused Reforms (CFR), Trusted Contact Person (TCP), and Temporary Hold amendments to NI 31-103, all of which come into effect on December 31, 2021. The MFDA has made conforming changes to its regulatory instruments to adopt such requirements. These changes also come into effect on December 31, 2021. Additional details are set out below.

Client Focused Reforms

In October 2019, the CSA published, in final form, the CFR amendments to NI 31-103. MFDA requirements must, at a minimum, be consistent with those under securities legislation.

Accordingly, the MFDA developed conforming amendments to MFDA regulatory instruments. These amendments were categorized as Housekeeping or Public Comment Rule proposals, and published in November 2020 (comment was sought in respect of the Public Comment Rule Proposals). Subsequently, in June 2021, proposed CFR conforming changes to MSN-0069 (Suitability) were also published for comment.

All proposed CFR conforming changes to MFDA regulatory instruments have received the required approvals, were ratified by Members at the December 3, 2021 AGM, and will come into effect on December 31, 2021. Members and Approved Persons are reminded that enhanced conflicts of interest requirements under revised Rule 2.1.4 came into effect on June 30, 2021.

For additional details, please see the following Bulletins: #0795-P; #0819‑P; #0843-P; #0863-P; #0864-P; #0876-P; and #0887-M.

Trusted Contact Person and Temporary Holds

On July 15, 2021, the CSA published, in final form, amendments to NI 31-103. These amendments enhance the protection of older and vulnerable clients by providing registrants, including MFDA Members and Approved Persons, with tools to address issues of financial exploitation and diminished mental capacity. The amendments require Members and Approved Persons to take reasonable steps to obtain the name and contact information of a trusted contact person. In addition, the amendments create a regulatory framework for registrants who place a temporary hold on transactions, withdrawals or transfers in circumstances where the registrant has a reasonable belief that there is financial exploitation of a vulnerable client or where there are concerns about a client’s mental capacity to make decisions involving financial matters.

Accordingly, the MFDA developed conforming changes to MFDA Rules 2.2 and 5.1, which were categorized as housekeeping amendments.

The conforming changes to MFDA Rules 2.2 and 5.1 have received the required approvals, were ratified by Members at the December 3, 2021 AGM, and will come into effect on December 31, 2021.

For addition details, please see Bulletins #0866-P, #0884-P and #0887-M.

To view the revised MFDA regulatory instruments (i.e. various Rules, Policy No. 2, and various MFDA Staff Notices), as they will appear on December 31, 2021, please go to: MFDA Regulatory Instruments and Notices in Effect December 31, 2021.