Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
Comments Due By: December 19, 2023
The Canadian Investment Regulatory Organization (CIRO) is publishing for comment Phase 1 of its Rule Consolidation Project rule proposals.1 The Rule Consolidation Project will bring together the two member regulation rule sets currently applicable to investment dealers2 and to mutual fund dealers3 into one set of member regulation rules applicable to both categories of CIRO Dealer Members.4
The objective of Phase 1 of the Rule Consolidation Project (Phase 1 Proposed DC Rules) is to establish a framework for the development of consolidated rules that will apply to all CIRO Dealer Members. The consolidated member regulation rules will be known as the CIRO Dealer and Consolidated (DC) Rules.
The Phase 1 Proposed DC Rules establish the DC Rules structure, which involves the adoption of:
How to Submit Comments
Comments on the Phase 1 Proposed DC Rules should be in writing and delivered by December 19, 2023 to:
Member Regulation Policy
Canadian Investment Regulatory Organization
Suite 2000
121 King Street West
Toronto, Ontario M5H 3T9
e-mail: [email protected]
A copy should also be delivered to the Canadian Securities Administrators (CSA) to:
Market Regulation
Ontario Securities Commission
Suite 1903, Box 55
20 Queen Street West Toronto, Ontario M5H 3S8
e-mail: [email protected]
and
Capital Markets Regulation
B.C. Securities Commission
P.O. Box 10142, Pacific Centre
701 West Georgia Street, Vancouver, British Columbia, V7Y 1L2
e-mail: [email protected]
Commentators should be aware that a copy of their comment letter will be made publicly available on the CIRO website at www.ciro.ca
One of the initial CIRO priorities is to consolidate the IDPC Rules and MFD Rules into one set of rules, the DC Rules, applicable to both investment dealers and mutual fund dealers.
The primary objectives of this consolidation work are:
Taking these objectives into consideration, the following decisions have been made relating to the structure and content of the DC Rules:
Matter | Decision |
---|---|
Rule organization structure and numbering approach | Use the IDPC Rule organization structure |
Rule drafting convention | Standard rule with, where applicable, alternative compliance approaches to accommodate business model differences |
Rule drafting style | Plain language |
Rule development and implementation approach | Rules will be developed and implemented in five phases |
The first phase of the Rule Consolidation Project focuses on DC Rule Series 1000:
Rule Series | Title and Description |
---|---|
1000 | Interpretation and Principles Rules – provisions relating to:
|
2000 | Dealer Member Organization and Registration Rules – rules concerning Dealer Member ownership and structure, and approval and proficiency of individuals acting on behalf of the Dealer Member |
3000 | Business Conduct and Client Accounts Rules – rules concerning business conduct (e.g. books and records), conflicts of interest, client accounts (e.g. account supervision), and dealing with clients (e.g. suitability obligations and complaints) |
4000 | Dealer Member Financial and Operational Rules – rules concerning Dealer Member financial and operational matters |
5000 | Dealer Member Margin Rules – rules concerning margin requirements |
6000 | Reserved for future use |
7000 | Debt Markets and Inter-Dealer Bond Brokers Rules – rules concerning debt market trading activities and inter-dealer bond brokers |
8000 | Procedural Rules - Enforcement – rules concerning investigations, enforcement proceedings, disciplinary proceedings, hearing committees, and rules of practice and procedure |
9000 | Procedural Rules - Other – rules concerning compliance examinations, approvals and regulatory supervision, regulatory review procedures, opportunities to be heard, alternative dispute resolution, and CIPF requirements |
As part of our review of existing IDPC Rule and MFD Rule interpretation, application, definitions, exemption, and general standard provisions, we identified material differences that will require further consideration as part of future phases of the Rule Consolidation Project. Given the interdependencies between some of these material differences and the related definitions, we have proposed interim definitions, where applicable, which retain the status quo and may need to be revised once a decision is made on the material differences in future phases.
To provide details of the Proposed Phase 1 DC Rules, the following documents have been included as appendices to this Bulletin:
In the next sections of this Bulletin, we summarize the key elements of the Phase 1 Proposed DC Rules, which in most cases are the adoption of existing rule provisions from the existing IDPC Rules, the existing MFD Rules or both sets of existing rules. Where material changes relating to:
are being proposed within the Phase 1 Proposed DC Rules or will be proposed within a subsequent phase of the Rule Consolidation Project, these changes will be highlighted within this Bulletin.
The following provisions have been adopted/introduced within proposed DC Rule 1100 to:
A difference was identified as part of our review of existing IDPC and MFD Rule interpretation and application provisions regarding delegation of tasks and activities. While the intention of both sets of IDPC Rule and MFD Rule provisions is to prohibit the delegation of tasks or activities where the rules require that they be performed by an individual with a specific job title, Approved Person category or individual registration category or where the tasks or activities are securities-related, the two rule sets impose this prohibition in different ways.
Specifically, existing IDPC Rule subsection 1103(1) permits the delegation of tasks and activities involved in performing a function unless the delegation is specifically prohibited within the rules. To ensure that certain activities (including all securities-related activities) are never delegated, several IDPC requirements specify that an individual with a specific job title, Approved Person category or individual registration category must perform the task or activity in order to comply with the rule requirements.
Conversely, existing MFD Rules 1.1.3 and 2.5.8 collectively prohibit the delegation of tasks or activities assigned elsewhere within the MFD Rules to individuals with a specific job title, Approved Person category or individual registration category and/or considered to be securities related business unless the delegation is specifically permitted within the rules.
As part of the Phase 1 Proposed DC Rules, we have adopted existing IDPC Rule subsection 1103(1) relating to delegation but have not yet made a final decision whether the final general rule requirement relating to delegation should:
We have included a question later on in this Bulletin asking for your views on the final general rule drafting approach we should take and why.
The following provisions have been adopted/introduced within DC Rule section 1201 to:
There are several activities for which there are regulatory requirements set out within the IDPC Rules and there are no equivalent regulatory requirements set out within the MFD Rules. There are at least two possible reasons for these differences in regulatory requirements as follows:
1. the activity is specifically limited to investment dealers under securities legislation
2. the activity has not historically been permitted to be undertaken within mutual fund dealers.
Specific examples of activities that can be conducted through investment dealers that are not permitted to be conducted through mutual fund dealers are the offering of direct electronic access accounts, discretionary accounts, managed accounts and order execution only accounts.
Direct electronic access accounts
In the case of direct electronic access accounts, only investment dealers are permitted to offer this account type pursuant to National Instrument 23-103 Electronic Trading and Direct Electronic Access to Marketplaces. To codify this limitation, the existing IDPC Rule defined term for “direct electronic access account” has been:
Discretionary accounts
In the case of discretionary accounts, these are advisory accounts for which a client who is frequently or temporarily unavailable to make their own investment decisions has given to their advisor temporary discretionary authority to make investment decisions on their behalf.
With the advances in the communication methods available, clients are now generally much more available to make their own investment decisions and there is no longer a significant need to make discretionary account arrangements available to investment dealer clients. Also, this account type has never been made available to mutual fund dealer clients. For these reasons, we have decided:
To codify these decisions, the existing IDPC Rule defined term for “discretionary account” has been:
Managed accounts and order execution only accounts
In the case of managed accounts and order execution only accounts, only the IDPC Rules permit the offering of these accounts, subject to the investment dealer and the relevant Approved Persons meeting a number of specific conditions. The existing IDPC Rule defined terms have been revised to retain the status quo.
To clarify within the DC Rules which rules are applicable to all Dealer Members and which rules are applicable only to investment dealers or to mutual fund dealers, the following defined terms have been introduced/adopted within DC Rule subsection 1201(2):
One of the material differences identified as part of our review of existing IDPC Rules and MFD Rules is that both sets of rules prescribe the regular completion and submission of different dealer financial solvency reports, both of which are identified as Form 1. Both forms include different sets of calculations designed to determine the Dealer Member’s risk adjusted capital.
The decision to either retain two separate Form 1 reports or move to one has significant implications that need to be further considered before a decision can be made. These material differences will be addressed as part of a future phase of the Rule Consolidation Project.
To maintain the status quo in the interim, the following defined terms have been introduced/adopted within DC Rule subsection 1201(2):
There are material differences in the Approved Person regimes that apply to investment dealers and mutual fund dealers. The decision to either retain two separate regimes or to consolidate these two regimes has significant implications that need to be further considered before a decision can be made. These material differences will be addressed as part of a future phase of the Rule Consolidation Project. To maintain the status quo in the interim, the following defined terms have been adopted within DC Rule subsection 1201(2):
Existing IDPC Rule subsection 1201(2) and MFD Rule 2.8.1 contain defined terms relating to public communications as follows:
IDPC Rule subsection 1201(2) | MFD Rule 2.8.1 |
---|---|
“advertisement” | “advertisement” |
“correspondence” | “client communication” |
“sales literature” | “sales communication” |
We are proposing to combine and adopt the above defined terms into the following DC Rule subsection 1201(2) defined terms:
As part of this work, we have revised the wording within each of the proposed DC Rule defined terms to more clearly specify the types of communications that are captured within the scope of each term.
Existing IDPC Rule subsection 1201(2) defines the term “business location” as a location where registerable activity takes place but does not specifically refer to a “branch office” as a type of business location whereas the MFD Rules commonly refer to “branch office” as a type of location from which any dealer business is conducted. Within DC Rule subsection 1201(2), we are proposing to adopt a definition of “business location” that specifically refers to a branch office.
Existing MFD Rule 1A. defines the “client name” and “nominee name” terms and there are differences between the existing IDPC Rules and the existing MFD Rules in how firms report to their clients on positions held for clients in “nominee name” and in “client name”. Because of these differences and the high likelihood that these reporting approach differences will continue to be permitted with the DC Rules, we are proposing to adopt these defined terms within DC Rule subsection 1201(2).
Existing IDPC Rule subsection 1201(2) defines the “institutional client” and “retail client” terms and other IDPC rules prescribe sales conduct requirements applicable to each client category whereas the existing MFD Rules do not categorize clients for sales conduct purposes. To preserve the existing IDPC Rule distinction between rules applicable to sophisticated clients and rules applicable to unsophisticated clients, we are proposing to adopt the “institutional client” and “retail client” terms within DC Rule subsection 1201(2).
As part of a future phase of the Rule Consolidation Project we will need to make a determination as to whether the use of the “institutional client” / “retail client” categorization should be extended to Mutual Fund Dealer Members and, if so, whether all Dealer Members should be given the option of treating all clients as “retail clients” to avoid the burden of having to categorize clients.
In order to ensure that the proposed consolidated rules remain consistent over time with the existing and proposed IDPC Rules and MFD Rules, we have incorporated the following “business as usual” rule amendment proposals within the Proposed Phase 1 DC Rules:
The former MFDA General By-law provided the MFDA with the ability to group exemptive relief whereas existing IDPC Rule 1300 only allows the CIRO Board of Directors to grant exemptive relief on a case-by-case basis. We believe giving the CIRO Board of Directors the ability to grant group exemptive relief would be beneficial to investors, Dealer Members and CIRO staff as it would significantly reduce the burden on Dealer Members seeking common exemptive relief, enable CIRO staff to consider one exemptive relief application for issues of common interest, and provide consistency of regulatory treatment to the benefit of investors. As a result, we are proposing to adopt within DC Rule 1300:
We are proposing to adopt within DC Rule 1400, the existing language of IDPC Rule 1400. As a result, these general standards of conduct will be applicable to all Dealer Members, including Mutual Fund Dealer Members.
As the Rule Consolidation Project is being pursued in five phases, and the combined impact of the project can only be assessed once development of all five phases has been completed, it would be misleading for us to assess the impact of each phase in isolation from the other phases or to make an assessment of the combined impact of all five project phases until all phases have been developed.
To provide you with some impact information in the interim, we will identify the impacts specific to each project phase, as each project phase is published for public comment and provide an overall Rule Consolidation Project impact assessment once all five phases have been developed.
In most cases, the Phase 1 Proposed DC Rules have no impact until other rules are adopted/introduced as part of the future phases of the Rule Consolidation Project.
As an example, the adoption of existing defined terms from the IDPC Rules and MFD Rules (some of which will be modified) alone will have no impact on investment dealers, mutual fund dealers, investors and other stakeholders. Rather, impacts will more commonly occur where there is a future phase change in the scope of application of a rule requirement or where there is a change in the rule requirement itself.
We have identified one matter that will have a material impact. This matter is the proposal to adopt the previous ability within the former MFDA General By-law to grant rule exemptive relief to a group of Regulated Persons. If adopted, this change will expand the ability to grant rule exemptive relief to groups of Regulated Persons that will include for the first time, investment dealers and their Approved Persons. We have already indicated in section 2.3 that we’ve assessed this proposed change as having a positive impact on investors, Dealer Members and CIRO staff.
We have identified no regional impacts associated with the Phase 1 Proposed DC Rules. As stated in section 2.3, the Regulated Persons stakeholder group will benefit should the proposed Board of Directors expanded ability to grant group rule exemptive relief be approved.
We didn’t consider any alternatives to rule consolidation, such as maintaining separate rules for investment dealer and mutual fund dealers as, based on the feedback provided in response to CSA Position Paper 25-404, New Self Regulatory Organization Framework, we determined that there is general cross-stakeholder support for rule consolidation.
While comment is requested on all aspects of the Phase 1 Proposed DC Rules, comment is also specifically requested on the following questions:
Question #1 - Delegation |
---|
As part of the Phase 1 Proposed DC Rules, we have adopted existing IDPC Rule subsection 1103(1) relating to delegation but have not yet made a final decision on the approach we should take in drafting the final general rule requirement relating to delegation. Which of the following rule drafting approaches do you think we should take and why? Should we:
|
Question #2 - Temporary discretionary accounts |
---|
We have determined that there is no longer a need to make temporary discretionary account arrangements available to clients and will be proposing to eliminate this investment dealer account type as part of future phase of the Rule Consolidation Project. Do you agree with the proposed elimination of this investment dealer account type? If not, please provide reasons why this account type should be retained. |
Question #3 - Account types that can be offered by Investment Dealer Members and Mutual Fund Dealer Members |
---|
Under the Phase 1 Proposed DC Rules, the following account types will be available to Dealer Members:
Should we consider proposing to allow Mutual Fund Dealer Members to offer managed accounts and order execution only accounts as part of a future Rule Consolidation Project phase and provided they comply with requirements that are materially the same as those that apply to Investment Dealer Members? Any such changes would have to be developed in conjunction with the CSA. |
Question #4 – Regulatory financial filing forms |
---|
The existing IDPC and MFD rules require the completion and submission of two different regulatory financial filings forms (both referred to as Form 1). As part of a future Rule Consolidation Project phase, a determination will need to be made as to whether we maintain two different regulatory financial filing forms or one going forward. Do you think we should maintain two different regulatory financial filing forms or one for both categories of CIRO Dealer Members? Why? |
Question #5 – Harmonized Approved Person regime |
---|
There are material differences in the Approved Person regimes that apply to Investment Dealer Members and Mutual Fund Dealer Members. Our intention is to:
What other factors should CIRO consider in its future phase work to develop a more harmonized Approved Person regime? |
Question #6 - Categorization of clients |
---|
As part of a future phase of the Rule Consolidation Project we will need to determine whether the use of the “institutional client” / “retail client” categorization should be extended to Mutual Fund Dealer Members and, if so, whether all Dealer Members should be given the option of treating all clients as “retail clients” to avoid the burden of having to categorize clients. Should all Dealer Members have the options of either: (1) categorizing their clients as either an “institutional client” or a “retail client” and complying with the rules relevant to each client type, or (2) treating all clients as “retail clients” and complying with the rules relevant to retail clients? Why or why not? |
We took the public interest into consideration when developing the Phase 1 Proposed DC Rules and we believe the proposals achieve their intended objective of ensuring that like dealer activities will be regulated in a like manner while minimizing regulatory arbitrage between investment dealers and mutual fund dealers.
We also believe the Proposed DC Rules will foster public confidence in capital markets by ensuring all CIRO Dealer Members will be held to standards of conduct that foster fair, equitable and ethical business standards and practices.
The Board of Directors of CIRO (Board) has determined the Phase 1 Proposed DC Rules to be in the public interest and on September 27, 2023 approved them for public comment.
We consulted with the following CIRO advisory committees on this matter:
After considering the comments received in response to this Request for Comments together with any comments of the CSA, CIRO staff may recommend revisions to the Phase 1 Proposed DC Rules. If the revisions and comments received are not material in nature, the Board has authorized the President to approve the revisions on CIRO’s behalf and the revised Proposed DC Rules will be subject to approval by the CSA. If the revisions or comments are material, CIRO staff will submit the Proposed DC Rules, including any revisions, to the Board for approval for republication or implementation, as applicable.
Appendix 1 – Proposed DC Rules – Phase 1 (clean)
Appendix 2 – Proposed DC Rules – Phase 1 (blackline)
Appendix 3 – Table of concordance
Appendix 1
SERIES 1000 | INTERPRETATION AND PRINCIPLES RULES
RULE 1100 | INTERPRETATION
1101. Introduction
1102. General interpretation
1103. Delegation by a Dealer Member
1104. Electronic signatures
1105. Transitional provision
1106. – 1199. Reserved.
RULE 1200 | DEFINITIONS
1201. Definitions
The following terms have the meanings set out when used in the Corporation requirements:
“acceptable clearing corporation” (chambre de compensation agréée) | The same meaning as set out in Investment Dealer Form 1, General Notes and Definitions. |
“acceptable counterparty” (contrepartie agréée) | The same meaning as set out in Investment Dealer Form 1, General Notes and Definitions. |
“acceptable entity” (entité agréée) | The same meaning as set out in Mutual Fund Dealer Form 1, General Notes and Definitions. |
“acceptable exchange” (bourse agréée) | The same meaning as set out in Investment Dealer Form 1, General Notes and Definitions. |
“acceptable institution” (institution agréée) | The same meaning as set out in:
|
“acceptable foreign marketplace” (marché étranger agréé) | Any entity operating as:
The legislation or oversight regime must provide for or recognize the exchange’s, or the quotation and trade reporting system’s, or the alternative trading system’s powers of compliance and enforcement over its members or participants. |
“acceptable securities location” (lieu agréé de dépôt de titres) | The same meaning as set out in:
|
“actively engaged in the business of the Dealer Member” (participer activement aux activités du courtier membre) | Participating in the Dealer Member’s regular business activities, operations or promotion of a Dealer Member’s services. It does not include participating in board or board corporate governance committee meetings or occasional referrals to the Dealer Member that were not solicited on the Dealer Member’s behalf. |
“advertisement” (publicité) | Any commercials, commentaries and other published materials promoting a Dealer Member’s business, including materials disseminated or made available electronically. |
“advisory account” (compte avec conseils) | An account which is subject to a suitability determination where:
|
“advisory capacity” (qualité de conseiller) | Providing advice to an issuer in return for remuneration other than trading advice or related services. |
“affiliate” (membre du même groupe ) | Where used to indicate a relationship between two corporations, means:
|
“agent” (mandataire) | An individual who is subject to the principal and agent relationship requirements set out in Rule 2300. |
“applicable laws” (lois applicables) | All laws, statutes, ordinances, regulations, rules, orders, judgments, decrees or other regulatory directions, applicable to a Regulated Person or its employees, partners, directors or officers, in the conduct of their business. |
“Appointments Committee” (comité des nominations) | A committee composed of:
|
“approved investor” (investisseur autorisé) | An industry investor (defined in clause 2102(1)) or any other person who requires the approval of the Corporation to invest in a Dealer Member. |
“Approved Person” (Personne autorisée) | Means:
|
“associate” (lien) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Associate Portfolio Manager” (Gestionnaire de portefeuille adjoint) | An individual designated by the Investment Dealer Member and approved by the Corporation to provide discretionary portfolio management for managed accounts under the supervision of a Portfolio Manager. |
“beneficial owner” (propriétaire véritable) | A person who has beneficial ownership of securities. |
“beneficial ownership” (propriété véritable) | Beneficial ownership of securities includes ownership:
|
“Board” (conseil) | The same meaning as set out in General By-law No. 1, section 1.1. |
“bundled order” (ordre groupé) | The same meaning as set out in Universal Market Integrity Rule 1.1. |
“business day” (jour ouvrable) | A day other than Saturday, Sunday and any statutory holiday in the relevant District. |
“business location” (établissement) | A branch office or other location where an activity that requires registration or Corporation approval is carried out by or on behalf of a Dealer Member and includes a residence if regular and ongoing activity that requires registration or approval is carried out from the residence or if records relating to an activity that requires registration or approval are kept at the residence. |
“carrying broker” (courtier chargé de comptes) | A Dealer Member that carries client accounts for another Dealer Member, which includes the clearing and settlement of trades, the maintenance of records of client transactions and accounts, and the custody of client cash, securities, precious metals bullion and other property, in accordance with the requirements set out in Rule 2400. |
“CDS” (CDS) | CDS Clearing and Depository Services Inc. |
“chartered bank” (banque à charte) | A bank incorporated under the Bank Act (Canada). |
“Chief Compliance Officer” (Chef de la conformité) | An individual approved by the Corporation to act as the chief compliance officer of an Investment Dealer Member. |
“Chief Financial Officer” (Chef des finances) | An individual approved by the Corporation to act as the chief financial officer of an Investment Dealer Member. |
“clearing day” (jour de compensation) | Any day CDS or another acceptable clearing corporation is open for business. |
“client communication” (communication avec un client) | Any communication, including communications disseminated or made available electronically:
including trade confirmations and account statements, other than advertisements and sales communications. |
“client name” (au nom du client) | Any cash, securities or other client property that is held in the name of and by a person other than the Dealer Member, its agent or custodian. |
“control” (contrôle) | Where used to indicate control of a corporation, means a person who has beneficial ownership of voting securities in the corporation that carry more than 50% of the votes for election of directors of the corporation and such votes allow the person to elect a majority of the directors; but if the Board orders that a person does or does not control the corporation under the Corporation requirements, that order defines their relationship under the Corporation requirements. |
“Corporation” (Organisation) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Corporation Membership Disclosure Policy” (Politique de communication de la qualité de membre de l’Organisation) | The policy setting out the Corporation’s Membership disclosure requirements for Dealer Members, as made available on the Corporation’s website. |
“Corporation requirements” (exigences de l’Organisation) | Requirements set out within the Corporation’s Rules, along with all other instruments prescribed or adopted within the Corporation’s Rules, and related Corporation rulings. |
“Dealer Member” (courtier membre) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Dealer Member related activities” (activités liées aux fonctions de courtier membre) | Acting as a Dealer Member, or carrying on business that is necessary or incidental to being a Dealer Member. The Board may include or exclude any activities from this definition. |
“Dealer Member’s auditor" (auditeur du courtier membre) | An auditor on the Corporation approved list of accounting firms chosen by the Dealer Member to be its auditor. |
“debt security” (titre de créance) | Any security that provides the holder with a legal right, in specified circumstances, to demand payment of the amount owing and includes a debtor-creditor relationship. The term includes securities with short-term maturities or mandatory tender periods such as commercial paper and floating rate notes as well as traditional notes and bonds. |
“derivative” (dérivé) | A contract or an instrument classified as:
but does not include a contract or instrument determined by the Corporation to be classified in a category other than a derivative. |
“designated rating organization” (agence de notation désignée) | The same meaning as set out in Investment Dealer Form 1, General Notes and Definitions. |
“designated Supervisor” (Surveillant désigné) | A Supervisor that the Investment Dealer Member makes responsible for a supervisory role defined in the Corporation requirements, including a Supervisor responsible for:
|
“direct electronic access account” (compte avec accès électronique direct) | An Investment Dealer Member account which is not subject to suitability determination (other than as required by clauses 3402(3)(i) and 3403(4)(i)) where:
|
“Director” (Administrateur) | A member of an Investment Dealer Member’s board of directors or an individual performing similar functions at an Investment Dealer Member that is not a corporation. |
“discretionary account” (compte carte blanche) | An Investment Dealer Member account which is subject to the suitability determination and over which the client has given discretionary authority where:
|
“District” (région) | The same meaning as set out in General By-law No. 1, section 1.1. |
“domestic gross customer margin model” (modèle national fondé sur les marges brutes des clients) | A framework to comply with a futures segregation and portability customer protection regime where the amount of margin that a Dealer Member must post on behalf of its clients to a clearing corporation in Canada is the sum of the amounts of margin required for each client. |
“early warning excess” (excédent au titre du signal précurseur) | The same meaning as set out in:
|
“early warning reserve” (réserve au titre du signal précurseur) | This is calculated for Investment Dealer Members and has the same meaning as set out in Investment Dealer Form 1, Statement C. |
“employee” (employé) | An employee or agent of a Dealer Member. |
“Enforcement Staff” (personnel de la mise en application) | Corporation staff who are authorized to conduct enforcement activities on behalf of the Corporation, including conducting investigations and initiating and conducting disciplinary proceedings. |
“equity security” (titre de capitaux propres) | An interest, investment or security in a corporation in respect of which the holder has no legal right to demand payment until the corporation or its board of directors has passed a resolution declaring a dividend or other distribution or a winding up of the corporation. |
“Executive” (Membre de la haute direction) | An Investment Dealer Member’s partner, Director or officer who is involved in the Investment Dealer Member’s senior management, including anyone fulfilling the role of chair or vice-chair of the board of directors, chief executive officer, president, chief administrative officer, chief operating officer or a person acting in a similar capacity who is head of operations, Chief Financial Officer, Chief Compliance Officer, Ultimate Designated Person, member of an executive management committee or any other position that the Investment Dealer Member designates as an Executive position. |
“free credit balance” (solde créditeur disponible) | Free credit balance means:
However, the aggregate amount must not exceed the dollar amount of the credit balance. |
“futures segregation and portability customer protection regime” (régime de séparation et de transférabilité des contrats à terme standardisés pour la protection des clients) | A set of rules and procedures that enable a clearing corporation to operate according to the standards outlined in Principle 14 of the Principles for Financial Market Infrastructures published by the Bank for International Settlements and the International Organization of Securities Commissions, regarding client futures positions and collateral that support these positions. |
“Global Legal Entity Identifier System" (Système d’identifiant international pour les entités juridiques) | The same meaning as set out in Universal Market Integrity Rule 1.1. |
“guarantee” (cautionnement) | An agreement to be responsible for the liabilities of a person or to provide security for a person; and includes an agreement to:
if the agreement’s main purpose is to allow a person to perform its obligations under a security or investment, or to assure an investor in a security that the person will perform its obligations. |
“hearing” (audience) | A hearing in connection with a proceeding, proposed proceeding or other matter under the Corporation requirements, other than a prehearing conference (defined in section 8402). |
“hearing committee” (comité d’instruction) | A hearing committee of a District appointed under Rule 8300. |
“hearing panel” (formation d’instruction) | A panel selected by the National Hearing Officer to conduct a hearing or prehearing conference (defined in section 8402). |
“hedger” (opérateur en couverture) | A non-individual that:
|
“holding company” (société de portefeuille) | Of a corporation means either:
|
“individual” (personne physique) | A natural person. |
“industry member” (membre représentant le secteur) | A current or former director, officer, partner or employee of a Member or Regulated Person, or an individual who is otherwise suitable and qualified for appointment to a hearing committee. |
“institutional client” (client institutionnel) | A person who is:
|
“internal controls” (contrôles internes) | The financial and operational policies and procedures established, maintained and applied by the Dealer Member’s management to provide reasonable assurance of the orderly and efficient conduct of the Dealer Member’s business. |
“inter-dealer bond broker” (courtier intermédiaire en obligations) | A person that provides information, trading and communications services for domestic debt securities trading among inter-dealer bond broker clients (defined in section 7302). |
“introducing broker” (remisier) | A Dealer Member or a Mutual Fund Dealer Member that introduces its client accounts to one or more carrying brokers, in accordance with the requirements set out in Rule 2400. |
“investigation” (enquête) | The powers of the Corporation to initiate and conduct enforcement investigations as set out in Rule 8100. |
“investment” (placement) | Any asset, excluding cash, held or transacted in a client account by the Dealer Member. |
“Investment Dealer Form 1” (Formulaire 1 du courtier en placement) | A regulatory financial report that must be filed by Investment Dealer Members with the Corporation. |
“Investment Dealer Member” (courtier membre en placement) | A Member that is registered as an investment dealer in accordance with securities law. |
“Investment Representative” (Représentant en placement) | An individual, approved by the Corporation, to trade in, but not advise on, securities, or derivatives, on the Investment Dealer Member’s behalf, including where that individual deals only in mutual funds. |
“IPF” or “Investor Protection Fund” (“FPI” ou “Fonds de protection des investisseurs”) | The same meaning as set out for the term IPF in General By-law No. 1, section 1.1. |
“IPF Disclosure Policy” (Politique de communication de l’adhésion au FPI) | The policy setting out the Investor Protection Fund’s membership disclosure requirements, as made available on IPF’s website. |
“Legal Entity Identifier” (identifiant pour entités juridiques) | A unique identification code assigned to a person in accordance with standards set by the Global Legal Entity Identifier System. |
"Legal Entity Identifier System Regulatory Oversight Committee" (Comité de surveillance réglementaire du Système d’identifiant international pour les entités juridiques) | The same meaning as set out in the Universal Market Integrity Rule 1.1. |
“listed derivative” (dérivé coté) | A derivative that is traded on a marketplace pursuant to standardized terms and conditions set out by that marketplace and whose trades are cleared and settled by a clearing agency. |
“listed security” (titre coté en bourse) | The same meaning as set out in Universal Market Integrity Rule 1.1. |
“managed account” (compte géré) | An account which is subject to a suitability determination where:
|
“manipulative and deceptive activities” (activités manipulatrices ou trompeuses) | Any manipulative or deceptive methods, act or practice in connection with any order or trade on a marketplace, and includes the entry of an order or the execution of a trade that would create or could reasonably be expected to create:
|
“Marketplace” (marché) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Marketplace Member” (marché membre) | The same meaning as set out in General By-law No. 1, section 1.1. |
“market value” (rovis marchande) |
|
“Member” (membre) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Membership” (qualité de membre) | Corporation membership. |
“Monitor” (Administrroviso ireisoire) | A person appointed under section 8209 or 8212 to monitor a Regulated Person’s business and affairs and to exercise powers granted by a hearing panel. |
“multiple client order” (ordre clients multiples) | The same meaning as set out in Universal Market Integrity Rule 1.1. |
“Mutual Fund Dealer Form 1” (Formulaire 1 du courtier en épargne collective) | A regulatory financial report that must be filed by Mutual Fund Dealer Members with the Corporation. |
“Mutual Fund Dealer Member” (courtier membre en épargne collective) | A Member that is registered as a mutual fund dealer in accordance with securities law and is not also registered as an investment dealer. |
“National Hearing Officer” (administrateur national des audiences) | A person appointed by the Corporation who is responsible for the administration of enforcement and other proceedings under the Corporation requirements and other employees of the Corporation to whom the person delegates the performance of such functions. |
“nominee name” (au nom d’une personne interposée) | Any cash, securities or other client property, other than client cash held in a trust account of a Dealer Member, that is held in the name of the Dealer Member, its agent or custodian, for the benefit of the client. |
“non-client accounts” or “non‑client orders” (compte non-client ou ordre non-client) | Accounts or orders in which the Dealer Member or an Approved Person has a direct or indirect interest other than the commission charged. |
“officer” (dirigeant) | A Dealer Member’s chair or vice-chair of the board of directors, chief executive officer, president, chief administrative officer, chief compliance officer, chief financial officer, chief operating officer, vice-president, secretary, any other person designated an officer of a Dealer Member by law or similar authority, or any person acting in a similar capacity on behalf of a Dealer Member. |
“order execution only account” (compte sans conseils) | An account which is not subject to a suitability determination (other than as required by clauses 3402(3)(i) and 3403(4)(i)) where:
|
“over-the-counter derivative” (dérivé de gré à gré) | Any derivative other than a listed derivative. |
“Participant” (participant) | The same meaning as set out in Universal Market Integrity Rule 1.1. |
“party” (partie) | A party to a proceeding under the Corporation requirements, including Enforcement Staff and Corporation staff. |
“person” (personne) | An individual, a partnership, a corporation, a government or any of its departments or agencies, a trustee, an incorporated or unincorporated organization, an incorporated or unincorporated syndicate or an individual’s heirs, executors, administrators or other legal representatives. |
“Portfolio Manager” (Gestionnaire de portefeuille) | An individual designated by the Investment Dealer Member and approved by the Corporation to provide discretionary portfolio management for managed accounts. |
“public member” (membre représentant le public) | A public member in relation to a hearing committee means:
|
“recognized foreign regulatory organization” (organisme d’autoréglementation étranger reconnu) | A foreign regulatory organization including a foreign self-regulatory organization, which offers reciprocal treatment to Canadian applicants and which has been recognized by the Corporation as such. |
“records” (documentation ou dossiers) | Books, records, audio and video recordings, client files and other documentation, including information electronically stored or records by any other means, related to the Regulated Person’s business. |
“Region” (région) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Regional Council” (conseil régional) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Registered Representative” (Représentant inscrit) | An individual, approved by the Corporation, to trade, or advise on trades, in securities or derivatives with the public in Canada, on the Dealer Member’s behalf, including where that individual deals only in mutual funds or only with institutional clients. |
“regulated entity” (entité réglementée) | The same meaning as set out in:
|
“Regulated Persons” (personnes réglementées) | The same meaning as set out in General By-law No. 1, section 1.1. |
“related company” (société liée) | A sole proprietorship, partnership or corporation that is a Dealer Member and is related to another Dealer Member because:
where the ownership interest includes an interest as a partner or shareholder, either directly or indirectly, or an interest through one or more holding companies. But if the Board has ordered that two persons are, or are not, related companies under the Corporation requirements, that order defines their relationship under the Corporation requirements. |
“remuneration” (rémuneration) | Any benefit or consideration, including goods and service, monetary or otherwise that could be provided to or received by a person. |
“repurchase agreement” (mise en pension) | An agreement to sell and repurchase securities. |
“research report” (rapport de recherche) | Any written or electronic communication for distribution to clients or prospective clients containing an analyst’s recommendation about the purchase, sale or holding of a security, excluding any government debt security or any government guaranteed debt security. |
“respondent” (intimé) | A person who is the subject of a proceeding or settlement under Corporation requirements. |
“reverse repurchase agreement” (prise en pension) | An agreement to purchase and resell securities. |
“retail client” (client de détail) | A client that is not an institutional client. |
“risk adjusted capital” (capital régularisé en fonction du risque) | The capital level maintained by a Dealer Member, calculated in accordance with:
|
“Rules” (Règles) | The same meaning as set out in General By-law No. 1, section 1.1. |
“Rules of Procedure” (Règles de procédure) | The rules of practice and procedure under Rule 8400. |
“safekeeping” (garde) | The holding of securities by a Dealer Member for a client in accordance with the requirements set out in Part A of Rule 4400. |
“sales communication” (outil de commercialisation) | Any communication, including communications disseminated or made available electronically:
|
“sanction” (sanction) | A penalty imposed by a hearing panel or a penalty or other measure imposed under a settlement agreement. |
“securities laws” (lois sur les valeurs mobilières) | Any laws about trading, distributing, advising or any other related activities in securities or derivatives in Canada enacted by the government of Canada or any province or territory in Canada and all regulations, rules, orders, judgments and other regulatory directions relating to such laws. |
“securities regulatory authority” (autorité en valeurs mobilières) | In any jurisdiction in Canada, the commission, person or other authority authorized to administer securities laws. |
"securities and derivatives related business" (securities and derivatives related business) | Any business or activity (whether or not carried on for gain) engaged in, directly or indirectly, which constitutes trading or advising in securities or derivatives for the purposes of securities laws, including for greater certainty, offers and sales pursuant to exemptions under securities laws. |
"security" (valeur mobilière ou titre) | A security as defined within the relevant securities law other than a derivative. |
“segregation” (dépôt fiduciaire de titres ou dépôt fiduciaire) | A practice whereby a Dealer Member holds in trust client securities and precious metals bullion that are:
|
“settlement agreement” (entente de règlement) | A written agreement between Corporation staff and a respondent to settle a proceeding or proposed proceeding under Rule 8200. |
“settlement hearing” (audience de règlement) | A hearing relating to a settlement agreement. |
“shared office premises” (partage des bureaux, bureaux partagés, partager des bureaux et ses dérivés) | Premises a Dealer Member shares with another regulated Canadian financial service entity that is involved in financial activities, such as banking, mutual funds, insurance, deposit taking or mortgage brokerage activities. |
“significant area of risk” (catégorie de risque importante) | A function, process or an activity within a Dealer Member in which a failure to mitigate or control its risk could lead to material harm to the Dealer Member’s liquidity, solvency, operational capabilities, clients, client assets and other client positions. |
“SRO” (OAR) | The same meaning as defined in National Instrument 14-101. |
“sub-branch” (sous-succursale) | Any branch office having in total less than four Approved Persons and supervised by an Approved Person as required under Corporation requirements who is not normally present at such sub-branch office. |
“subordinated debt” (dette subordonnée) | Debt that does not entitle the holder to be paid in priority to any senior class of debt. |
“subsidiary” (filiale) | Subsidiary of an entity means:
and includes a corporation that is a subsidiary of another subsidiary of a corporation. |
“Supervisor” (Surveillant) | An individual given responsibility and authority by an Investment Dealer Member, and approved by the Corporation, to manage the activities of the Investment Dealer Member or the Investment Dealer Member’s Approved Persons or employees to provide reasonable assurance they comply with the Corporation requirements and securities laws. |
“temporary hold” (blocage temporaire) | means a hold that is placed on the purchase or sale of a security on behalf of a client or on the withdrawal or transfer of cash or securities from a client’s account. |
“total margin required” (marge obligatoire totale) | The same meaning as set out in:
|
“trade name” (nom commercial) | A name a Dealer Member or Approved Person uses to conduct business and includes a group name under which a Dealer Member and its affiliates conduct business. |
“Trader” (Négociateur) | An individual, approved by the Corporation as a trader, whose activity is restricted to trading through a Marketplace Member’s trading system, and who may not advise the public. |
“trading strategy” (stratégie de négociation) | A broad general approach to investments including matters such as the use of specific products, leverage, frequency of trading or a method of selecting particular investments but does not include specific trade or sectoral weighting recommendations. |
“Ultimate Designated Person” (Personne désignée responsable) | An individual approved by the Corporation to be responsible for the conduct of a designated Investment Dealer Member and the supervision of its employees and to perform the functions for an ultimate designated person described in the Corporation requirements. |
“written cash and securities loan agreement” (convention de prêt d’espèces et de titres écrite) | A written cash loan agreement or securities loan agreement, other than an overnight cash loan agreement (as defined in section 4602), where the Dealer Member receives or pays cash or, provides or receives securities, that contains the minimum provisions described in Part B of Rule 4600. |
1202. – 1299. Reserved.
RULE 1300 | EXEMPTIVE POWERS OF THE CORPORATION
1301. Introduction
1302. Exemptions from the Corporation requirements
1303. – 1399. Reserved.
RULE 1400 | STANDARDS OF CONDUCT
1401. Introduction
1402. Standards of conduct
1403. Applicability
1404. Policies and procedures
1405. Evidence of compliance with the Corporation requirements
1406. Compliance with all applicable laws
1407. Training
1408. – 1499. Reserved.
Go to the summary page for this Consultation >
10/20/23
23-0147