CANADA: Canadian Securities Regulators Propose Changes to Custody and Other Requirements for Dealers, Advisers and Investment Fund Managers

Friday July 8 2016

The Canadian Securities Administrators (CSA) has published proposed amendments to National Instrument 31-103 on Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and National Instrument 33-109 on Registration Information. The amendments include proposals to enhance custody requirements for certain registrants, clarify activities that may be conducted by exempt market dealers and incorporate relief from certain Client Relationship Model Phase 2 (CRM2) requirements into NI 31-103.

The proposed custody amendments are intended to address potential intermediary risks, enhance the protection of client assets and codify existing custodial best practices.

The proposals also contain amendments to NI 31-103 and its companion policy to:

• clarify the activities that may be conducted under the exempt market dealer category of registration in respect of trades in prospectus-qualified securities;
• expand an existing exemption from the dealer registration requirement so that registered advisers may trade in the securities of investment funds if the adviser or an affiliate manages the investment fund and certain conditions are met;
• make permanent temporary CRM2 relief granted in May 2015; and
• update guidance regarding the delivery of information required under CRM2 to address matters that have arisen in the course of its implementation.

The comment period closes October 5, 2016.

Click on the link above for further details