(For Revised Limited Authorization Form as amended in December 2013, please see Bulletin #0589-P)
Background
Please note that this Notice is to be read in conjunction with MSN-0039 Implementation Date for Revised Limited Trading Authorization for New Accounts.
MFDA Rule 2.3.2 (Limited Trading Authorization) provides that a Member or Approved Person may accept a limited trading authorization from a client for the express purpose of facilitating trade execution. The Rule requires that a form of limited trading authorization as prescribed by the MFDA be completed and approved by the Compliance Officer or Branch Manager and retained in the client’s file.
For the purpose of complying with Rule 2.3.2, for individual accounts, the MFDA issued MFDA Staff Notice MSN-0012 Limited Trading Authorizations (issued April 5, 2002, but no longer in effect) the Limited Authorization Form (Version: IFIC/LA-I-2-11/09/01 or Version IFIC/LA-I-3-02/05/02) (the “Form”) and Guidelines released by the Investment Funds Institute of Canada (“IFIC”).
In response to comments and suggestions received from industry participants, IFIC issued a new version of the Form for use with both individual and joint accounts and accompanying Guidelines (IFIC/LA-I&J- April 2005 Version). The new Form and accompanying Guidelines are attached to this Notice.
Joint Accounts
Please note that the MFDA has not previously, in accordance with MFDA Rule 2.3.2, prescribed a form of limited trading authorization for accounts other than individual accounts. The new version of the Form will be the prescribed limited trading authorization for joint accounts. MFDA Members are expected to implement the April 2005 version of the Form for joint accounts by April 1, 2006.
Individual Accounts
1. New Accounts Opened after May 1, 2005
In all provinces and territories, other than Quebec, any limited trading authorization with respect to new individual accounts opened after May 1, 2005 must be the April 2005 version of the Form.
2. Existing Accounts
MFDA Members may continue to execute trades for individual accounts under the IFIC/LA/-I-2-11/09/01 and IFIC/LA-I-3-02/05/02 versions of the Form, but these versions may not offer Members the same benefits of the April 2005 version and certain fund companies may reject trade instructions transmitted under the authority of the earlier versions of the Form. Members are therefore encouraged to have the April 2005 version of the Form executed by clients.
Please note that in Quebec, all trades after April 1, 2006 must be executed under the authority of the April 2005 version of the Form.