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Volume 52, No. 18

B.C. Reg. 226/2009

The British Columbia Gazette,

Part II

September 22, 2009

B.C. Reg. 226/2009 , deposited September 22, 2009, pursuant to the SECURITIES ACT [Section 184]. Rule of the British Columbia Securities Commission, dated September 21, 2009.

The British Columbia Securities Commission orders that:

(

a) effective September 28, 2009, the instruments, amendments and repeals set out in the Appendix to this Order are made,

(

b) effective March 28, 2010, sections 21, 22 and 53 of the Securities Rules, B.C. Reg. 194/97, are repealed, and

(

c) effective September 28, 2010, sections 19, 20, 24, 25, 49, 50, 52 (1) and 54 of the Securities Rules, B.C. Reg. 194/97, are repealed.

— B. AITKEN, British Columbia Securities Commission .

Appendix

1 National Instrument 31-103 Registration Requirements and Exemptions , attached as

Schedule A, is made.

2 National Instrument 33-109 Registration Information , B.C. Reg. 38/2003, is repealed and National Instrument 33-109 Registration Information , attached as

Schedule B, is made.

3 the Securities Rules, B.C. Reg. 194/97, is amended as set out in

Schedule C.

4 Rule 45-501 (BC): Mortgages , B.C. Reg. 189/2000, is amended as set out in

Schedule D.

5 Rule 45-502 (BC): Cooperative Associations , B.C. Reg. 9/2001, is repealed.

6 BC Instrument 22-502 Registration by the Investment Industry Regulatory Organization of Canada , B.C. Reg. 107/2008, is amended as set out in

Schedule E.

7 National Instrument 14-101

Definitions , B.C. Reg. 48/97, is amended as set out in

Schedule F.

8 National Instrument 24-101 Institutional Trade Matching and Settlement , B.C. Reg. 64/2007, is amended as set out in

Schedule G.

9 National Instrument 33-105 Underwriting Conflicts , B.C. Reg. 310/2001, is amended as set out in

Schedule H.

10 National Instrument 81-102 Mutual Funds , B.C. Reg. 2/2000, is amended as set out in

Schedule I.

11 National Instrument 81-104 Commodity Pools , B.C. Reg. 283/2002, is amended in

section 1.1 (1), in the definition of " mutual fund restricted individual " , by striking out " salesperson, partner, director or officer of a dealer " and substituting " dealing representative of a registered dealer ".

Section 1.1 of National Instrument 81-105 Mutual Fund Sales Practices , B.C. Reg. 131/98, is amended as set out in

Schedule J.

13 National Instrument 81-107 Independent Review Committee for Investment Funds , B.C. Reg. 276/2006, is amended as set out in

Schedule K.

14 National Instrument 31-102 National Registration Database , B.C. Reg. 37/2003, is amended as set out in

Schedule L.

15 Multilateral Instrument 11-101 Principal Regulator System , B.C. Reg. 265/2005, is repealed.

16 National Instrument 33-102 Regulation of Certain Registrant Activities , B.C. Reg. 174/2001, is repealed.

Schedule A

National Instrument 31-103

Registration Requirements and Exemptions

Contents

Part 1 —

Interpretation

Definitions of terms used throughout this Instrument

1.2

Interpretation of "securities" in Alberta, British Columbia, New Brunswick and Saskatchewan

1.3

Information may be given to the principal regulator

Individual

registration

Part 2 — Categories of Registration for Individuals

2.1

Individual categories

2.2

Client mobility exemption — individuals

2.3

Individuals acting for investment fund managers

Part 3 — Registration Requirements — Individuals

Division 1 — General proficiency requirements

3.1

Definitions

3.2

U.S. equivalency

3.3

Time limits on examination requirements

Division 2 — Education and experience requirements

3.4

Proficiency — initial and ongoing

3.5

Mutual fund dealer — dealing representative

3.6

Mutual fund dealer — chief compliance officer

3.7

Scholarship plan dealer — dealing representative

3.8

Scholarship plan dealer — chief compliance officer

3.9

Exempt market dealer — dealing representative

3.10

Exempt market dealer — chief compliance officer

3.11

Portfolio manager — advising representative

3.12

Portfolio manager — associate advising representative

3.13

Portfolio manager — chief compliance officer

3.14

Investment fund manager — chief compliance officer

Division 3 — Membership in a self-regulatory organization

3.15

Who must be approved by an SRO before registration

3.16

Exemptions from certain requirements for SRO-approved persons

Part 4 — Restrictions on Registered Individuals

4.1

Restriction on acting for another registered firm

4.2

Associate advising representatives — pre-approval of advice

Part 5 — Ultimate Designated Person and Chief Compliance Officer

5.1

Responsibilities of the ultimate designated person

5.2

Responsibilities of the chief compliance officer

Part 6 — Suspension and Revocation of Registration — Individuals

6.1

If individual ceases to have authority to act for firm

6.2

If IIROC approval is revoked or suspended

6.3

If MFDA approval is revoked or suspended

6.4

If sponsoring firm is suspended

6.5

Dealing and advising activities suspended

6.6

Revocation of a suspended registration — individual

6.7

Exception for individuals involved in a hearing

6.8

Application of

Part 6 in Ontario

Firm

registration

Part 7 — Categories of Registration for Firms

7.1

Dealer categories

7.2

Adviser categories

7.3

Investment fund manager category

Part 8 — Exemptions from the Requirement to Register

Division 1 — Exemptions from dealer and underwriter registration

8.1

Interpretation of "trade" in Québec

8.2

Definition of "securities" in Alberta, British Columbia, New Brunswick and Saskatchewan

8.3

Interpretation — exemption from underwriter registration requirement

8.4

Person or company not in the business of trading in British Columbia, Manitoba and New Brunswick

8.5

Trades through or to a registered dealer

8.6

Adviser — non-prospectus qualified investment fund

8.7

Investment fund reinvestment

8.8

Additional investment in investment funds

8.9

Additional investment in investment funds if initial purchase before September 14, 2005

8.10

Private investment club

8.11

Private investment fund — loan and trust pools

8.12

Mortgages

8.13

Personal property security legislation

8.14

Variable insurance contract

8.15

Schedule III banks and cooperative associations — evidence of deposit

8.16

Plan administrator

8.17

Reinvestment plan

8.18

International dealer

8.19

Self-directed registered education savings plan

8.20

Exchange contract — Alberta, British Columbia, New Brunswick and Saskatchewan

8.21

Specified debt

8.22

Small security holder selling and purchase arrangements

Division 2 — Exemptions from adviser registration

8.23

Dealer without discretionary authority

8.24

IIROC members with discretionary authority

8.25

Advising generally

8.26

International adviser

Division 3 — Exemptions from investment fund manager registration

8.27

Private investment club

8.28

Capital accumulation plan exemption

8.29

Private investment fund — loan and trust pools

Division 4 — Mobility exemption — firms

8.30

Client mobility exemption — firms

Part 9 — Membership in a Self-regulatory Organization

9.1

IIROC membership for investment dealers

9.2

MFDA membership for mutual fund dealers

9.3

Exemptions from certain requirements for SRO members

Part 10 — Suspension and Revocation of Registration — Firms

Division 1 — When a firm's registration is suspended

10.1

Failure to pay fees

10.2

If IIROC membership is revoked or suspended

10.3

If MFDA membership is revoked or suspended

10.4

Activities not permitted while a firm's registration is suspended

Division 2 — Revoking a firm's registration

10.5

Revocation of a suspended registration — firm

10.6

Exception for firms involved in a hearing

10.7

Application of

Part 10 in Ontario

Business

operations

Part 11 — Internal Controls and Systems

Division 1 — Compliance

11.1

Compliance system

11.2

Designating an ultimate designated person

11.3

Designating a chief compliance officer

11.4

Providing access to board

Division 2 — Books and records

11.5

General requirements for records

11.6

Division 3 — Certain business transactions

11.7

Tied settling of securities transactions

11.8

Tied selling

11.9

Registrant acquiring a registered firm's securities or assets

11.10

Registered firm whose securities are acquired

Part 12 — Financial Condition

Division 1 — Working capital

12.1

Capital requirements

12.2

Notifying the regulator of a subordination agreement

Division 2 — Insurance

12.3

Insurance — dealer

12.4

Insurance — adviser

12.5

Insurance — investment fund manager

12.6

Global bonding or insurance

12.7

Notifying the regulator of a change, claim or cancellation

Division 3 — Audits

12.8

Direction by a regulator to conduct an audit or review

12.9

Co-operating with the auditor

Division 4 — Financial reporting

12.10

Annual financial statements

12.11

Interim financial information

12.12

Delivering financial information — dealer

12.13

Delivering financial information — adviser

12.14

Delivering financial information — investment fund manager

Client

relationships

Part 13 — Dealing with Clients — Individuals and Firms

Division 1 — Know your client and suitability

13.1

Investment fund managers exempt from this Division

13.2

Know your client

13.3

Suitability

Division 2 — Conflicts of interest

13.4

Identifying and responding to conflicts of interest

13.5

Restrictions on certain managed account transactions

13.6

Disclosure when recommending related or connected securities

Division 3 — Referral arrangements

13.7

Definitions — referral arrangements

13.8

Permitted referral arrangements

13.9

Verifying the qualifications of the person or company receiving the referral

13.10

Disclosing referral arrangements to clients

13.11

Referral arrangements before this Instrument came into force

Division 4 — Loans and margin

13.12

Restriction on lending to clients

13.13

Disclosure when recommending the use of borrowed money

Division 5 — Complaints

13.14

Application of this Division

13.15

Handling complaints

13.16

Dispute resolution service

Part 14 — Handling Client Accounts — Firms

Division 1 — Exemption for investment fund managers

14.1

Investment fund managers exempt from

Part 14

Division 2 — Disclosure to clients

14.2

Relationship disclosure information

14.3

Disclosure to clients about the fair allocation of investment opportunities

14.4

When the firm has a relationship with a financial institution

14.5

Notice to clients by non-resident registrants

Division 3 — Client assets

14.6

Holding client assets in trust

14.7

Holding client assets — non-resident registrants

14.8

Securities subject to a safekeeping agreement

14.9

Securities not subject to a safekeeping agreement

Division 4 — Client accounts

14.10

Allocating investment opportunities fairly

14.11

Selling or assigning client accounts

Division 5 — Account activity reporting

14.12

Content and delivery of trade confirmation

14.13

Semi-annual confirmations for certain automatic plans

14.14

Client statements

Exemption

from this

Instrument

Part 15 — Granting an Exemption

15.1

Who can grant an exemption

Transition

and timing

Part 16 — Transition

16.1

Change of registration categories — individuals

16.2

Change of registration categories — firms

16.3

Change of registration categories — limited market dealers

16.4

Registration for investment fund managers active when this Instrument comes into force

16.5

Temporary exemption for Canadian investment fund manager registered in its principal jurisdiction

16.6

Temporary exemption for foreign investment fund managers

16.7

Registration of exempt market dealers

16.8

Registration of ultimate designated persons

16.9

Registration of chief compliance officers

16.10

Proficiency for dealing and advising representatives

16.11

Capital requirements

16.12

Continuation of existing discretionary relief

16.13

Insurance requirements

16.14

Relationship disclosure information

16.15

Referral arrangements

16.16

Complaint handling

16.17

Client statements — mutual fund dealers

16.18

Transition to exemption — international dealers

16.19

Transition to exemption — international advisers

16.20

Transition to exemption — portfolio manager and investment counsel (foreign)

Part 17 — When This Instrument Comes Into Force

17.1

Effective date

Forms

Form 31-103F1 Calculation of Excess Working Capital

Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service

Form 31-103F3 Use of Mobility Exemption

Appendices

Appendix A — Bonding and Insurance Clauses

Appendix B — Subordination Agreement

Appendix C — New Category Names — Individuals

Appendix D — New Category Names — Firms

Appendix E — Non-Harmonized Capital Requirements

Appendix F — Non-Harmonized Insurance Requirements

Part 1 —

Interpretation

1.1

Definitions of terms used throughout this Instrument

In this Instrument

"Canadian financial institution" has the same meaning as in

section 1.1 of NI 45-106;

"connected issuer" has the same meaning as in

section 1.1 of National Instrument 33-105 Underwriting Conflicts ;

"debt security" has the same meaning as in

section 1.1 of NI 45-106;

"eligible client" means a client of a person or company if any of the following apply:

(

a) the client is an individual and was a client of the person or company immediately before becoming resident in the local jurisdiction;

(

b) the client is the spouse or a child of a client referred to in paragraph (a);

(

c) except in Ontario, the client is a client of the person or company on September 27, 2009 pursuant to the person or company's reliance on an exemption from the registration requirement under

Part 5 of Multilateral Instrument 11-101 Principal Regulator System on that date;

"exempt market dealer" means a person or company registered in the category of exempt market dealer;

"IIROC" means the Investment Industry Regulatory Organization of Canada;

"investment dealer" means a person or company registered in the category of investment dealer;

"managed account" means an account of a client for which a person or company makes the investment decisions if that person or company has discretion to trade in securities for the account without requiring the client's express consent to a transaction;

"marketplace" has the same meaning as in

section 1.1 of National Instrument 21-101 Marketplace Operation ;

"MFDA" means the Mutual Fund Dealers Association of Canada;

"mutual fund dealer" means a person or company registered in the category of mutual fund dealer;

"NI 45-106" means National Instrument 45-106 Prospectus and Registration Exemptions ;

"permitted client" means any of the following:

(

a) a Canadian financial institution or a

Schedule III bank;

(

b) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);

(

c) a subsidiary of any person or company referred to in paragraph (

a) or (b), if the person or company owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of the subsidiary;

(

d) a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than as a scholarship plan dealer or a restricted dealer;

(

e) a pension fund that is regulated by either the federal Office of the Superintendent of Financial Institutions or a pension commission or similar regulatory authority of a jurisdiction of Canada or a wholly-owned subsidiary of such a pension fund;

(

f) an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (

a) to (e);

(

h) any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;

(

i) a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l'île de Montréal or an intermunicipal management board in Québec;

(

j) a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a managed account managed by the trust company or trust corporation, as the case may be;

(

k) a person or company acting on behalf of a managed account managed by the person or company, if the person or company is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction;

(

l) an investment fund if one or both of the following apply:

(

i) the fund is managed by a person or company registered as an investment fund manager under the securities legislation of a jurisdiction of Canada;

(ii) the fund is advised by a person or company authorized to act as an adviser under the securities legislation of a jurisdiction of Canada;

(

m) in respect of a dealer, a registered charity under the Income Tax Act (Canada) that obtains advice on the securities to be traded from an eligibility adviser, as defined in

section 1.1 of NI 45-106, or an adviser registered under the securities legislation of the jurisdiction of the registered charity;

(

n) in respect of an adviser, a registered charity under the Income Tax Act (Canada) that is advised by an eligibility adviser, as defined in

section 1.1 of NI 45-106, or an adviser registered under the securities legislation of the jurisdiction of the registered charity;

(

o) an individual who beneficially owns financial assets, as defined in

section 1.1 of NI 45-106, having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5 million;

(

p) a person or company that is entirely owned by an individual or individuals referred to in paragraph (o), who holds the beneficial ownership interest in the person or company directly or through a trust, the trustee of which is a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction;

(

q) a person or company, other than an individual or an investment fund, that has net assets of at least $25 million as shown on its most recently prepared financial statements;

(

r) a person or company that distributes securities of its own issue in Canada only to persons or companies referred to in paragraphs (

a) to (q);

"portfolio manager" means a person or company registered in the category of portfolio manager;

"principal jurisdiction" means

(

a) for a person or company other than an individual, the jurisdiction of Canada in which the person or company's head office is located, and

(

b) for an individual, the jurisdiction of Canada in which the individual's working office is located;

"registered firm" means a registered dealer, a registered adviser, or a registered investment fund manager;

"registered individual" means an individual who is registered

(

a) in a category that authorizes the individual to act as a dealer or an adviser on behalf of a registered firm,

(

b) as ultimate designated person, or

(

c) as chief compliance officer;

"related issuer" has the same meaning as in

section 1.1 of National Instrument 33-105 Underwriting Conflicts ;

"restricted dealer" means a person or company registered in the category of restricted dealer;

"restricted portfolio manager" means a person or company registered in the category of restricted portfolio manager;

"Schedule III bank" means an authorized foreign bank named in

Schedule III of the Bank Act (Canada);

"scholarship plan dealer" means a person or company registered in the category of scholarship plan dealer;

"sponsoring firm" means the registered firm on whose behalf an individual acts as a dealer, an underwriter, an adviser, a chief compliance officer or an ultimate designated person;

"subsidiary" has the same meaning as in

section 1.1 of NI 45-106;

"working office" means the office of the sponsoring firm where an individual does most of his or her business.

1.2

Interpretation of "securities" in Alberta, British Columbia, New Brunswick and Saskatchewan

In Alberta, British Columbia, New Brunswick and Saskatchewan, a reference to "securities" in this Instrument includes "exchange contracts", unless the context otherwise requires.

1.3 Information may be given to the principal regulator

(1) In this section, "principal regulator" means

(

a) for a registered firm whose head office is in a jurisdiction of Canada, the securities regulatory authority or regulator of that jurisdiction, and

(

b) for a registered firm whose head office is not in Canada, the securities regulatory authority or regulator of,

(

i) if the firm has not completed its first financial year since being registered, the jurisdiction of Canada in which the firm expects most of its clients to be resident at the end of its current financial year, and

(ii) in all other circumstances, the jurisdiction of Canada in which most of the firm's clients were resident at the end of its most recently completed financial year.

(2) Except under the following sections, for the purpose of a requirement in this Instrument to notify the regulator or the securities regulatory authority, the person or company may notify the regulator or the securities regulatory authority by notifying the person or company's principal regulator:

(

a) section 8.18 [international dealer] ;

(

b) section 8.26 [international adviser] ;

(

c) section 11.9 [registrant acquiring a registered firm's securities or assets] ;

(

d) section 11.10 [registered firm whose securities are acquired] .

(3) For the purpose of a requirement in this Instrument to deliver or submit a document to the regulator or the securities regulatory authority, the person or company may deliver or submit the document by delivering or submitting it to the person or company's principal regulator.

Part 2 — Categories of Registration for Individuals

2.1 Individual categories

(1) The following are the categories of registration for an individual who is required, under securities legislation, to be registered to act on behalf of a registered firm:

(

a) dealing representative;

(

b) advising representative;

(

c) associate advising representative;

(

d) ultimate designated person;

(

e) chief compliance officer.

(2) An individual registered in the category of

(

a) dealing representative may act as a dealer or an underwriter in respect of a security that the individual's sponsoring firm is permitted to trade or underwrite,

(

b) advising representative may act as an adviser in respect of a security that the individual's sponsoring firm is permitted to advise on,

(

c) associate advising representative may act as an adviser in respect of a security that the individual's sponsoring firm is permitted to advise on if the advice has been approved under subsection 4.2 (1) [associate advising representatives — pre-approval of advice] ,

(

d) ultimate designated person must perform the functions set out in

section 5.1 [responsibilities of the ultimate designated person] , and

(

e) chief compliance officer must perform the functions set out in

section 5.2 [responsibilities of the chief compliance officer] .

(3) Subsection (1) does not apply in Ontario.

Note: In Ontario, the same categories of registration for individuals as in subsection 2.1 (1) are set out under

section 25 of the Securities Act (Ontario).

2.2 Client mobility exemption — individuals

(1) The registration requirement does not apply to an individual if all of the following apply:

(

a) the individual is registered as a dealing, advising or associate advising representative in the individual's principal jurisdiction;

(

b) the individual's sponsoring firm is registered in the firm's principal jurisdiction;

(

c) the individual does not act as a dealer, underwriter or adviser in the local jurisdiction other than as he or she is permitted to in his or her principal jurisdiction according to the individual's registration in that jurisdiction;

(

d) the individual does not act as a dealer, underwriter or adviser in the local jurisdiction other than for 5 or fewer eligible clients;

(

e) the individual complies with

Part 13 [dealing with clients — individuals and firms] ;

(

f) the individual deals fairly, honestly and in good faith in the course of his or her dealings with an eligible client;

(

g) before first acting as a dealer or adviser for an eligible client, the individual's sponsoring firm has disclosed to the client that the individual, and if the firm is relying on

section 8.30 [client mobility exemption — firms] , the firm,

(

i) is exempt from registration in the local jurisdiction, and

(ii) is not subject to requirements otherwise applicable under local securities legislation.

(2) If an individual relies on the exemption in this section, the individual's sponsoring firm must submit a completed Form 31-103F3 Use of Mobility Exemption to the securities regulatory authority of the local jurisdiction as soon as possible after the individual first relies on this section.

2.3 Individuals acting for investment fund managers

The investment fund manager registration requirement does not apply to an individual acting on behalf of a registered investment fund manager.

Part 3 — Registration Requirements — Individuals

Division 1 — General proficiency requirements

3.1

Definitions

In this Part

"Branch Manager Proficiency Exam" means the examination prepared and administered by the RESP Dealers Association of Canada and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Canadian Investment Funds Exam" means the examination prepared and administered by the Investment Funds Institute of Canada and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Canadian Investment Manager designation" means the designation earned through the Canadian investment manager program prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every program that preceded that program, or succeeded that program, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned program;

"Canadian Securities Course Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"CFA Charter" means the charter earned through the Chartered Financial Analyst program prepared and administered by the CFA Institute and so named on the day this Instrument comes into force, and every program that preceded that program, or succeeded that program, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned program;

"Exempt Market Products Exam" means the examination prepared and administered by the IFSE Institute and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Investment Funds in Canada Course Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Mutual Fund Dealers Compliance Exam" means the examination prepared and administered by the IFSE Institute and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"New Entrants Course Exam" means the examination prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"PDO Exam" means

(

a) the Officers', Partners' and Directors' Exam prepared and administered by the Investment Funds Institute of Canada and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination, or

(

b) the Partners, Directors and Senior Officers Course Exam prepared and administered by CSI Global Education Inc. and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Sales Representative Proficiency Exam" means the examination prepared and administered by the RESP Dealers Association of Canada and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination;

"Series 7 Exam" means the examination prepared and administered by the Financial Industry Regulatory Authority in the United States of America and so named on the day this Instrument comes into force, and every examination that preceded that examination, or succeeded that examination, that does not have a significantly reduced scope and content when compared to the scope and content of the first-mentioned examination.

3.2 U.S. equivalency

In this Part, an individual is not required to have passed the Canadian Securities Course Exam if the individual has passed the Series 7 Exam and the New Entrants Course Exam.

3.3 Time limits on examination requirements

(1) For the purposes of this Part, an individual is deemed to have not passed an examination, and is deemed to have not successfully completed a program, unless the individual passed the examination or successfully completed the program within 36 months before the date the individual applied for registration.

(2) Subsection (1) does not apply if the individual passed the examination or successfully completed the program more than 36 months before the date the individual applied for registration and one or both of the following apply:

(

a) for any 12 months during the 36-month period before the date the individual applied for registration in a category, the individual was registered in the same category in a jurisdiction of Canada;

(

b) the individual gained 12 months of relevant securities industry experience during the 36-month period before the date the individual applied for registration.

(3) In Québec, the examinations provided for in subsections (4) and (6) of

section 45 of Policy Q-9 Dealers, Advisers and Representatives , as it read on September 27, 2009, are deemed to be relevant examinations for purposes of subsection (2).

Division 2 — Education and experience requirements

3.4 Proficiency — initial and ongoing

(1) An individual must not perform an activity that requires registration unless the individual has the education, training and experience that a reasonable person would consider necessary to perform the activity competently.

(2) A chief compliance officer must not perform an activity set out in

section 5.2 [responsibilities of the chief compliance officer] unless the individual has the education, training and experience that a reasonable person would consider necessary to perform the activity competently.

3.5 Mutual fund dealer — dealing representative

A dealing representative of a mutual fund dealer must not act as a dealer on behalf of the mutual fund dealer unless one or both of the following apply:

(

a) the representative has passed the Canadian Investment Funds Exam, the Canadian Securities Course Exam or the Investment Funds in Canada Course Exam;

(

b) the representative has met the requirements of

section 3.11 [portfolio manager — advising representative] .

3.6 Mutual fund dealer — chief compliance officer

A mutual fund dealer must not designate an individual as its chief compliance officer under subsection 11.3 (1) [designating a chief compliance officer] unless any of the following apply:

(

a) the individual has passed

(

i) the Canadian Investment Funds Exam, the Canadian Securities Course Exam or the Investment Funds in Canada Course Exam, and

(ii) the PDO Exam or the Mutual Fund Dealers Compliance Exam;

(

b) the individual has met the requirements of

section 3.13 [portfolio manager — chief compliance officer]

3.7 Scholarship plan dealer — dealing representative

A dealing representative of a scholarship plan dealer must not act as a dealer on behalf of the scholarship plan dealer unless the representative has passed the Sales Representative Proficiency Exam.

3.8 Scholarship plan dealer — chief compliance officer

A scholarship plan dealer must not designate an individual as its chief compliance officer under subsection 11.3 (1) [designating a chief compliance officer] unless the individual has passed all of the following:

(

a) the Sales Representative Proficiency Exam;

(

b) the Branch Manager Proficiency Exam;

(

c) the PDO Exam.

3.9 Exempt market dealer — dealing representative

A dealing representative of an exempt market dealer must not act as a dealer on behalf of the exempt market dealer unless any of the following apply:

(

a) the individual has passed the Canadian Securities Course Exam;

(

b) the individual has passed the Exempt Market Products Exam;

(

c) the individual satisfies the conditions set out in

section 3.11 [portfolio manager — advising representative] .

3.10 Exempt market dealer — chief compliance officer

An exempt market dealer must not designate an individual as its chief compliance officer under subsection 11.3 (1) [designating a chief compliance officer] unless any of the following apply:

(

a) the individual has passed the PDO Exam and any of the following:

(

i) the Canadian Securities Course Exam;

(ii) the Exempt Market Products Exam;

(

b) the individual has met the requirements of

section 3.13 [portfolio manager — chief compliance officer] .

3.11 Portfolio manager — advising representative

An advising representative of a portfolio manager must not act as an adviser on behalf of the portfolio manager unless any of the following apply:

(

a) the representative has earned a CFA Charter and has 12 months of relevant investment management experience in the 36-month period before applying for registration;

(

b) the representative has received the Canadian Investment Manager designation and has 48 months of relevant investment management experience, 12 months of which was in the 36-month period before applying for registration.

3.12 Portfolio manager — associate advising representative

An associate advising representative of a portfolio manager must not act as an adviser on behalf of the portfolio manager unless any of the following apply:

(

a) the representative has completed Level 1 of the Chartered Financial Analyst program and has 24 months of relevant investment management experience;

(

b) the representative has received the Canadian Investment Manager designation and has 24 months of relevant investment management experience.

3.13 Portfolio manager — chief compliance officer

A portfolio manager must not designate an individual as its chief compliance officer under subsection 11.3 (1) [designating a chief compliance officer] unless any of the following apply:

(

a) the individual has

(

i) earned a CFA Charter or a professional designation as a lawyer, Chartered Accountant, Certified General Accountant or Certified Management Accountant in a jurisdiction of Canada, a notary in Québec, or the equivalent in a foreign jurisdiction,

(ii) passed the Canadian Securities Course Exam and the PDO Exam, and

(iii) either

A) gained 36 months of relevant securities experience while working at an investment dealer, a registered adviser or an investment fund manager, or

B) provided professional services in the securities industry for 36 months and worked at a registered dealer, a registered adviser or an investment fund manager for 12 months;

(

b) the individual has passed the Canadian Securities Course Exam and the PDO Exam and any of the following apply:

(

i) the individual has worked at an investment dealer or a registered adviser for 5 years, including for 36 months in a compliance capacity;

(ii) the individual has worked for 5 years at a Canadian financial institution in a compliance capacity relating to portfolio management and worked at a registered dealer or a registered adviser for 12 months;

(

c) the individual has passed the PDO Exam and has met the requirements of

section 3.11 [portfolio manager — advising representative] .

3.14 Investment fund manager — chief compliance officer

An investment fund manager must not designate an individual as its chief compliance officer under subsection 11.3 (1) [designating a chief compliance officer] unless any of the following apply:

(

a) the individual has

(

i) earned a CFA Charter or a professional designation as a lawyer, Chartered Accountant, Certified General Accountant or Certified Management Accountant in a jurisdiction of Canada, a notary in Québec, or the equivalent in a foreign jurisdiction,

(ii) passed the Canadian Securities Course Exam and the PDO Exam, and

(iii) either

A) gained 36 months of relevant securities experience while working at a registered dealer, a registered adviser or an investment fund manager, or

B) provided professional services in the securities industry for 36 months and worked in a relevant capacity at an investment fund manager for 12 months;

(

b) the individual has

(

i) passed the Canadian Investment Funds Exam, the Canadian Securities Course Exam, or the Investment Funds in Canada Course Exam,

(ii) passed the PDO Exam, and

(iii) gained 5 years of relevant securities experience while working at a registered dealer, registered adviser or an investment fund manager, including 36 months in a compliance capacity.

(

c) the individual has met the requirements of

section 3.13 [portfolio manager — chief compliance officer] .

Division 3 — Membership in a self-regulatory organization

3.15 Who must be approved by an SRO before registration

(1) A dealing representative of an investment dealer must be an "approved person" as defined under the rules of IIROC.

(2) Except in Québec, a dealing representative of a mutual fund dealer must be an "approved person" as defined under the rules of the MFDA.

3.16 Exemptions from certain requirements for SRO-approved persons

(1) The following sections do not apply to a registered individual who is a dealing representative of a member of IIROC:

(

a) subsection 13.2 (3) [know your client] ;

(

b) section 13.3 [suitability] ;

(

c) section 13.13 [disclosure when recommending the use of borrowed money] .

(2) The following sections do not apply to a registered individual who is a dealing representative of a member of the MFDA:

(

a) section 13.3 [suitability] ;

(

b) section 13.13 [disclosure when recommending the use of borrowed money] .

(3) In Québec, the requirements listed in subsection (2) do not apply to a registered individual who is a dealing representative of a mutual fund dealer if the registered individual complies with the applicable regulations on mutual fund dealers in Québec.

Part 4 — Restrictions on Registered Individuals

4.1 Restriction on acting for another registered firm

An individual registered as a dealing, advising or associate advising representative of a registered firm must not act as an officer, partner or director of another registered firm that is not an affiliate of the first-mentioned registered firm.

4.2 Associate advising representatives — pre-approval of advice

(1) An associate advising representative of a registered adviser must not advise on securities unless, before giving the advice, the advice has been approved by an individual designated by the registered firm under subsection (2).

(2) A registered adviser must designate, for an associate advising representative, an advising representative to review the advice of the associate advising representative.

(3) No later than the 7th day following the date of a designation under subsection (2), a registered adviser must provide the regulator with the names of the advising representative and the associate advising representative who are the subject of the designation.

Part 5 — Ultimate Designated Person and Chief Compliance Officer

5.1 Responsibilities of the ultimate designated person

The ultimate designated person of a registered firm must do all of the following:

(

a) supervise the activities of the firm that are directed towards ensuring compliance with securities legislation by the firm and each individual acting on the firm's behalf;

(

b) promote compliance by the firm, and individuals acting on its behalf, with securities legislation.

5.2 Responsibilities of the chief compliance officer

The chief compliance officer of a registered firm must do all of the following:

(

a) establish and maintain policies and procedures for assessing compliance by the firm, and individuals acting on its behalf, with securities legislation;

(

b) monitor and assess compliance by the firm, and individuals acting on its behalf, with securities legislation;

(

c) report to the ultimate designated person of the firm as soon as possible if the chief compliance officer becomes aware of any circumstances indicating that the firm, or any individual acting on its behalf, may be in non-compliance with securities legislation and any of the following apply:

(

i) the non-compliance creates, in the opinion of a reasonable person, a risk of harm to a client;

(ii) the non-compliance creates, in the opinion of a reasonable person, a risk of harm to the capital markets;

(iii) the non-compliance is part of a pattern of non-compliance;

(

d) submit an annual report to the firm's board of directors, or individuals acting in a similar capacity for the firm, for the purpose of assessing compliance by the firm, and individuals acting on its behalf, with securities legislation.

Part 6 — Suspension and Revocation of Registration — Individuals

6.1 If individual ceases to have authority to act for firm

If a registered individual ceases to have authority to act as a registered individual on behalf of his or her sponsoring firm because of the end of, or a change in, the individual's employment, partnership, or agency relationship with the firm, the individual's registration with the firm is suspended until reinstated or revoked under securities legislation.

6.2 If IIROC approval is revoked or suspended

If IIROC revokes or suspends a registered individual's approval in respect of an investment dealer, the individual's registration as a dealing representative of the investment dealer is suspended until reinstated or revoked under securities legislation.

6.3 If MFDA approval is revoked or suspended

Except in Québec, if the MFDA revokes or suspends a registered individual's approval in respect of a mutual fund dealer, the individual's registration as a dealing representative of the mutual fund dealer is suspended until reinstated or revoked under securities legislation.

6.4 If sponsoring firm is suspended

If a registered firm's registration in a category is suspended, the registration of each registered dealing, advising or associate advising representative acting on behalf of the firm in that category is suspended until reinstated or revoked under securities legislation.

6.5 Dealing and advising activities suspended

If an individual's registration in a category is suspended, the individual must not act as a dealer, an underwriter or an adviser, as the case may be, under that category.

6.6 Revocation of a suspended registration — individual

If a registration of an individual has been suspended under this Part and it has not been reinstated, the registration is revoked on the 2nd anniversary of the suspension.

6.7 Exception for individuals involved in a hearing

Despite

section 6.6, if a hearing concerning a suspended registrant is commenced under securities legislation or a proceeding concerning the registrant is commenced under the rules of an SRO, the registrant's registration remains suspended.

6.8 Application of

Part 6 in Ontario

Other than

section 6.5 [dealing and advising activities suspended] , this Part does not apply in Ontario.

Note: In Ontario, measures governing suspension in

section 29 of the Securities Act (Ontario) are similar to those in Parts 6 and 10.

Part 7 — Categories of Registration for Firms

7.1 Dealer categories

(1) The following are the categories of registration for a person or company that is required, under securities legislation, to be registered as a dealer:

(

a) investment dealer;

(

b) mutual fund dealer;

(

c) scholarship plan dealer;

(

d) exempt market dealer;

(

e) restricted dealer.

(2) A person or company registered in the category of

(

a) investment dealer may act as a dealer or an underwriter in respect of any security,

(

b) mutual fund dealer may act as a dealer in respect of any security of

(

i) a mutual fund, or

(ii) except in Québec, an investment fund that is a labour-sponsored investment fund corporation or labour-sponsored venture capital corporation under legislation of a jurisdiction of Canada,

(

c) scholarship plan dealer may act as a dealer in respect of a security of a scholarship plan, an educational plan or an educational trust,

(

d) exempt market dealer may

(

i) act as a dealer by trading a security that is distributed under an exemption from the prospectus requirement, whether or not a prospectus was filed in respect of the distribution,

(ii) act as a dealer by trading a security that, if the trade were a distribution, would be exempt from the prospectus requirement,

(iii) receive an order from a client to sell a security that was acquired by the client in a circumstance described in subparagraph (

i) or (ii), and may act or solicit in furtherance of receiving such an order, and

(iv) act as an underwriter in respect of a distribution of securities that is made under an exemption from the prospectus requirement;

(

e) restricted dealer may act as a dealer or an underwriter in accordance with the terms, conditions, restrictions or requirements applied to its registration.

(3) Despite paragraph (2) (b), in British Columbia a mutual fund dealer may also act as a dealer in respect of securities of any of the following:

(

a) scholarship plans;

(

b) educational plans;

(

c) educational trusts.

(4) Subsection (1) does not apply in Ontario.

Note: In Ontario, the same categories of registration for firms acting as dealers as in subsection 7.1 (1) are set out under subsection 26 (2) of the Securities Act (Ontario).

7.2 Adviser categories

(1) The following are the categories of registration for a person or company that is required, under securities legislation, to be registered as an adviser:

(

a) portfolio manager;

(

b) restricted portfolio manager.

(2) A person or company registered in the category of

(

a) portfolio manager may act as an adviser in respect of any security, and

(

b) restricted portfolio manager may act as an adviser in respect of any security in accordance with the terms, conditions, restrictions or requirements applied to its registration.

(3) Subsection (1) does not apply in Ontario.

Note: In Ontario, the same categories of registration for firms acting as advisers as in subsection 7.2 (1) are set out under subsection 26 (6) of the Securities Act (Ontario).

7.3 Investment fund manager category

The category of registration for a person or company that is required, under securities legislation, to be registered as an investment fund manager is "investment fund manager".

Part 8 — Exemptions from the Requirement to Register

Division 1 — Exemptions from dealer and underwriter registration

8.1

Interpretation of "trade" in Québec

In this Part, in Québec, "trade" refers to any of the following activities:

(

a) the activities described in the definition of "dealer" in

section 5 of the Securities Act (R.S.Q., c. V-1.1), including the following activities:

(

i) the sale or disposition of a security by onerous title, whether the terms of payment are on margin, installment or otherwise, but does not include a transfer or the giving in guarantee of securities in connection with a debt or the purchase of a security, except as provided in paragraph (b);

(ii) participation as a trader in any transaction in a security through the facilities of an exchange or a quotation and trade reporting system;

(iii) the receipt by a registrant of an order to buy or sell a security;

(

b) a transfer or the giving in guarantee of securities of an issuer from the holdings of a control person in connection with a debt.

8.2 Definition of "securities" in Alberta, British Columbia, New Brunswick and Saskatchewan

Despite

section 1.2, in Alberta, British Columbia, New Brunswick and Saskatchewan, a reference to "securities" in this Division excludes "exchange contracts".

8.3

Interpretation — exemption from underwriter registration requirement

In this Division, an exemption from the dealer registration requirement is an exemption from the underwriter registration requirement.

8.4 Person or company not in the business of trading in British Columbia, Manitoba and New Brunswick

(1) In British Columbia and New Brunswick, a person or company is exempt from the dealer registration requirement if the person or company

(

a) is not engaged in the business of trading in securities or exchange contracts as a principal or agent, and

(

b) does not hold himself, herself or itself out as engaging in the business of trading in securities or exchange contracts as a principal or agent.

(2) In Manitoba, a person or company is exempt from the dealer registration requirement if the person or company

(

a) is not engaged in the business of trading in securities as a principal or agent, and

(

b) does not hold himself, herself or itself out as engaging in the business of trading in securities as a principal or agent.

8.5 Trades through or to a registered dealer

The dealer registration requirement does not apply to a person or company in respect of a trade by the person or company if one of the following applies:

(

a) the trade is made solely through an agent who is a registered dealer, if the dealer is registered in a category that permits the trade;

(

b) the trade is made to a registered dealer who is purchasing as principal, if the dealer is registered in a category that permits the trade.

8.6 Adviser — non-prospectus qualified investment fund

(1) The dealer registration requirement does not apply to a registered adviser, or an adviser that is exempt from registration under

section 8.26 [international adviser] , in respect of a trade in a security of a non-prospectus qualified investment fund if both of the following apply:

(

a) the adviser acts as the fund's adviser and investment fund manager;

(

b) the trade is to a managed account of a client of the adviser.

(2) The exemption in subsection (1) is not available if the managed account or non-prospectus qualified investment fund was created or is used primarily for the purpose of qualifying for the exemption.

(3) An adviser that relies on subsection (1) must provide written notice to the regulator that it is relying on the exemption within 7 days of its first use of the exemption.

8.7 Investment fund reinvestment

(1) Subject to subsections (2), (3), (4) and (5), the dealer registration requirement does not apply to an investment fund, or the investment fund manager of the fund, in respect of a trade in a security with a security holder of the investment fund if the trade is permitted by a plan of the investment fund and is in a security of the investment fund's own issue and if any of the following apply:

(

a) a dividend or distribution out of earnings, surplus, capital or other sources payable in respect of the investment fund's securities is applied to the purchase of the security that is of the same class or series as the securities to which the dividends or distributions are attributable;

(

b) the security holder makes an optional cash payment to purchase the security of the investment fund and both of the following apply:

(

i) the security is of the same class or series of securities described in paragraph (

a) that trade on a marketplace;

(ii) the aggregate number of securities issued under the optional cash payment does not exceed, in the financial year of the investment fund during which the trade takes place, 2 per cent of the issued and outstanding securities of the class to which the plan relates as at the beginning of the financial year.

(2) The exemption in subsection (1) is not available unless the plan that permits the trade is available to every security holder in Canada to which the dividend or distribution is available.

(3) The exemption in subsection (1) is not available if a sales charge is payable on a trade described in the subsection.

(4) At the time of the trade, if the investment fund is a reporting issuer and in continuous distribution, the investment fund must have set out in the prospectus under which the distribution is made

(

a) details of any deferred or contingent sales charge or redemption fee that is payable at the time of the redemption of the security, and

(

b) any right that the security holder has to elect to receive cash instead of securities on the payment of a dividend or making of a distribution by the investment fund and instructions on how the right can be exercised.

(5) At the time of the trade, if the investment fund is a reporting issuer and is not in continuous distribution, the investment fund must provide the information required by subsection (4) in its prospectus, annual information form or a material change report.

8.8 Additional investment in investment funds

The dealer registration requirement does not apply to an investment fund, or the investment fund manager of the fund, in respect of a trade in a security of the investment fund's own issue with a security holder of the investment fund if all of the following apply:

(

a) the security holder initially acquired securities of the investment fund as principal for an acquisition cost of not less than $150,000 paid in cash at the time of the acquisition;

(

b) the trade is in respect of a security of the same class or series as the securities initially acquired, as described in paragraph (a);

(

c) the security holder, as at the date of the trade, holds securities of the investment fund and one or both of the following apply:

(

i) the acquisition cost of the securities being held was not less than $150,000;

(ii) the net asset value of the securities being held is not less than $150,000.

8.9 Additional investment in investment funds if initial purchase before September 14, 2005

The dealer registration requirement does not apply in respect of a trade by an investment fund in a security of its own issue to a purchaser that initially acquired a security of the same class as principal before September 14, 2005 if all of the following apply:

(

a) the security was initially acquired under any of the following provisions:

(

i) in Alberta, sections 86 (

e) and 131 (1) (

d) of the Securities Act (Alberta) as they existed prior to their repeal by sections 9 (

a) and 13 of the Securities Amendment Act (Alberta), 2003 SA c.32 and sections 66.2 and 122.2 of the Alberta Securities Commission Rules (General);

(ii) in British Columbia, sections 45 (2) (5) and (22), and 74 (2) (4) and (19) of the Securities Act (British Columbia);

(iii) in Manitoba, sections 19 (3) and 58 (1) (

a) of the Securities Act (Manitoba) and

section 90 of the Securities Regulation MR 491/88R;

(iv) in New Brunswick,

section 2.8 of Local Rule 45-501 Prospectus and Registration Exemptions ;

(

v) in Newfoundland and Labrador, sections 36 (1) (

e) and 73 (1) (

d) of the Securities Act (Newfoundland and Labrador);

(vi) in Nova Scotia, sections 41 (1) (

e) and 77 (1) (

d) of the Securities Act (Nova Scotia);

(vii) in Northwest Territories,

section 3 (

c) and (

z) of Blanket Order No. 1;

(viii) in Nunavut,

section 3 (

c) and (

z) of Blanket Order No. 1;

(ix) in Ontario, sections 35 (1)5 and 72 (1) (

d) of the Securities Act (Ontario) and

section 2.12 of Ontario Securities Commission Rule 45-501 Exempt Distributions that came into force on January 12, 2004;

(

x) in Prince Edward Island,

section 2 (3) (

d) of the former Securities Act (Prince Edward Island) and Prince Edward Island Local Rule 45-512 Exempt Distributions — Exemption for Purchase of Mutual Fund Securities ;

(xi) in Québec, former sections 51 and 155.1 (2) of the Securities Act (Québec);

(xii) in Saskatchewan, sections 39 (1) (

e) and 81 (1) (

d) of The Securities Act, 1988 (Saskatchewan);

(

b) the trade is for a security of the same class or series as the initial trade;

(

c) the security holder, as at the date of the trade, holds securities of the investment fund that have one or both of the following characteristics:

(

i) an acquisition cost of not less than the minimum amount prescribed by securities legislation referred to in paragraph (

a) under which the initial trade was conducted;

(ii) a net asset value of not less than the minimum amount prescribed by securities legislation referred to in paragraph (

a) under which the initial trade was conducted.

8.10 Private investment club

The dealer registration requirement does not apply in respect of a trade in a security of an investment fund if all of the following apply:

(

a) the fund has no more than 50 beneficial security holders;

(

b) the fund does not seek and has never sought to borrow money from the public;

(

c) the fund does not distribute and has never distributed its securities to the public;

(

d) the fund does not pay or give any remuneration for investment management or administration advice in respect of trades in securities, except normal brokerage fees;

(

e) the fund, for the purpose of financing its operations, requires security holders to make contributions in proportion to the value of the securities held by them.

8.11 Private investment fund — loan and trust pools

(1) The dealer registration requirement does not apply in respect of a trade in a security of an investment fund if all of the following apply:

(

a) the fund is administered by a trust company or trust corporation that is registered or authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(

b) the fund has no promoter or investment fund manager other than the trust company or trust corporation referred to in paragraph (a);

(

c) the fund commingles the money of different estates and trusts for the purpose of facilitating investment.

(2) Despite subsection (1), a trust company or trust corporation registered under the laws of Prince Edward Island that is not registered under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada is not a trust company or trust corporation for the purpose of paragraph (1) (a).

8.12 Mortgages

(1) In this section, "syndicated mortgage" means a mortgage in which two or more persons or companies participate, directly or indirectly, as lenders in the debt obligation that is secured by the mortgage.

(2) Subject to subsection (3), the dealer registration requirement does not apply in respect of a trade in a mortgage on real property in a jurisdiction of Canada by a person or company who is registered or licensed, or exempted from registration or licensing, under mortgage brokerage or mortgage dealer legislation of that jurisdiction.

(3) In Alberta, British Columbia, Manitoba, Québec and Saskatchewan, subsection (2) does not apply in respect of a trade in a syndicated mortgage.

(4) This

section does not apply in Ontario.

Note: In Ontario a similar exemption from the dealer registration requirement is provided under subsection 35 (4) of the Securities Act (Ontario).

8.13 Personal property security legislation

(1) The dealer registration requirement does not apply in respect of a trade to a person or company, other than an individual in a security evidencing indebtedness secured by or under a security agreement, secured in accordance with personal property security legislation of a jurisdiction of Canada that provides for the granting of security in personal property.

(2) This

section does not apply in Ontario.

Note: In Ontario a similar exemption from the dealer registration requirement is provided under subsection 35 (2) of the Securities Act (Ontario).

8.14 Variable insurance contract

(1) In this

section

"contract" , "group insurance" , "insurance company" , "life insurance" and "policy" have the respective meanings assigned to them in the legislation referenced opposite the name of the local jurisdiction in Appendix A of NI 45-106;

"variable insurance contract" means a contract of life insurance under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets.

(2) The dealer registration requirement does not apply in respect of a trade in a variable insurance contract by an insurance company if the variable insurance contract is

(

a) a contract of group insurance,

(

b) a whole life insurance contract providing for the payment at maturity of an amount not less than 75% of the premium paid up to age 75 years for a benefit payable at maturity,

(

c) an arrangement for the investment of policy dividends and policy proceeds in a separate and distinct fund to which contributions are made only from policy dividends and policy proceeds, or

(

d) a variable life annuity.

8.15

Schedule III banks and cooperative associations — evidence of deposit

(1) The dealer registration requirement does not apply in respect of a trade in an evidence of deposit issued by a

Schedule III bank or an association governed by the Cooperative Credit Associations Act (Canada).

(2) This

section does not apply in Ontario.

Note: In Ontario, subsection 8.15 (1) is not required because the security described in the exemption is excluded from the definition of "security" in subsection 1 (1) of the Securities Act (Ontario).

8.16 Plan administrator

(1) In this

section

"consultant" has the same meaning as in

section 2.22 of NI 45-106;

"control person" has the same meaning as in

section 1.1 of NI 45-106;

"executive officer" has the same meaning as in

section 1.1 of NI 45-106;

"permitted assign" has the same meaning as in

section 2.22 of NI 45-106;

"plan" means a plan or program established or maintained by an issuer providing for the acquisition of securities of the issuer by employees, executive officers, directors or consultants of the issuer or of a related entity of the issuer;

"plan administrator" means a trustee, custodian, or administrator, acting on behalf of, or for the benefit of, employees, executive officers, directors or consultants of an issuer or of a related entity of an issuer;

"related entity" has the same meaning as in

section 2.22 of NI 45-106.

(2) The dealer registration requirement does not apply in respect of a trade made pursuant to a plan of the issuer in a security of an issuer, or an option to acquire a security of the issuer, made by the issuer, a control person of the issuer, a related entity of the issuer, or a plan administrator of the issuer with any of the following:

(

a) the issuer;

(

b) a current or former employee, executive officer, director or consultant of the issuer or a related entity of the issuer;

(

c) a permitted assign of a person or company referred to in paragraph (b).

(3) The dealer registration requirement does not apply in respect of a trade in a security of an issuer, or an option to acquire a security of the issuer, made by a plan administrator of the issuer if

(

a) the trade is pursuant to a plan of the issuer, and

(

b) the conditions in

section 2.14 of National Instrument 45-102 Resale of Securities are satisfied.

8.17 Reinvestment plan

(1) Subject to subsections (3), (4) and (5), the dealer registration requirement does not apply in respect of the following trades by an issuer, or by a trustee, custodian or administrator acting for or on behalf of the issuer, to a security holder of the issuer if the trades are permitted by a plan of the issuer:

(

a) a trade in a security of the issuer's own issue if a dividend or distribution out of earnings, surplus, capital or other sources payable in respect of the issuer's securities is applied to the purchase of the security;

(

b) subject to subsection (2), a trade in a security of the issuer's own issue if the security holder makes an optional cash payment to purchase the security of the issuer that trades on a marketplace.

(2) The aggregate number of securities issued under the optional cash payment referred to in subsection (1) (

b) must not exceed, in any financial year of the issuer during which the trade takes place, 2% of the issued and outstanding securities of the class to which the plan relates as at the beginning of the financial year.

(3) A plan that permits the trades described in subsection (1) must be available to every security holder in Canada to which the dividend or distribution out of earnings, surplus, capital or other sources is available.

(4) This

section is not available in respect of a trade in a security of an investment fund.

(5) Subject to

section 8.3.1 [transition — reinvestment plan] of NI 45-106, if the security traded under a plan described in subsection (1) is of a different class or series than the class or series of the security to which the dividend or distribution is attributable, the issuer or the trustee, custodian or administrator must have provided to each participant that is eligible to receive a security under the plan either a description of the material attributes and characteristics of the security traded under the plan or notice of a source from which the participant can obtain the information without charge.

8.18 International dealer

(1) In this section, "foreign security" means

(

a) a security issued by an issuer incorporated, formed or created under the laws of a foreign jurisdiction, or

(

b) a security issued by a government of a foreign jurisdiction.

(2) Subject to subsections (3) and (4), the dealer registration requirement does not apply in respect of the following:

(

a) an activity, other than a sale of a security, that is reasonably necessary to facilitate a distribution of securities that are offered primarily in a foreign jurisdiction;

(

b) a trade in a debt security with a permitted client during the security's distribution, if the debt security is offered primarily in a foreign jurisdiction and a prospectus has not been filed with a Canadian securities regulatory authority for the distribution;

(

c) a trade in a debt security that is a foreign security with a permitted client, other than during the security's distribution;

(

d) a trade in a foreign security with a permitted client, unless the trade is made during the security's distribution under a prospectus that has been filed with a Canadian securities regulatory authority;

(

e) a trade in a foreign security with an investment dealer;

(

f) a trade in any security with an investment dealer that is acting as principal.

(3) The exemptions under subsection (2) are not available to a person or company unless all of the following apply:

(

a) the head office or principal place of business of the person or company is in a foreign jurisdiction;

(

b) the person or company is registered under the securities legislation of the foreign jurisdiction in which its head office or principal place of business is located in a category of registration that permits it to carry on the activities in that jurisdiction that registration as a dealer would permit it to carry on in the local jurisdiction;

(

c) the person or company engages in the business of a dealer in the foreign jurisdiction in which its head office or principal place of business is located;

(

d) the person or company is acting as principal or as agent for the issuer of the securities, for a permitted client, or for a person or company that is not a resident of Canada;

(

e) the person or company has submitted to the securities regulatory authority a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service .

(4) The exemptions under subsection (2) are not available to a person or company in respect of a trade with a permitted client unless one of the following applies:

(

a) the permitted client is a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer;

(

b) the person or company has notified the permitted client of all of the following:

(

i) the person or company is not registered in Canada;

(ii) the person or company's jurisdiction of residence;

(iii) the name and address of the agent for service of process of the person or company in the local jurisdiction;

(iv) there may be difficulty enforcing legal rights against the person or company because it is resident outside Canada and all or substantially all of its assets may be situated outside of Canada.

(5) A person or company relying on subsection (2) must notify the regulator 12 months after it first submits a Form 31-103F2 under paragraph (3) (e), and each year thereafter, if it continues to rely on subsection (2).

(6) In Ontario, subsection (5) does not apply to a person or company that complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees .

8.19 Self-directed registered education savings plan

(1) In this

section

"self-directed RESP" means an educational savings plan registered under the Income Tax Act (Canada)

(

a) that is structured so that contributions by a subscriber to the plan are deposited directly into an account in the name of the subscriber, and

(

b) under which the subscriber maintains control and direction over the plan that enables the subscriber to direct how the assets of the plan are to be held, invested or reinvested subject to compliance with the Income Tax Act (Canada).

(2) The dealer registration requirement does not apply in respect of a trade in a self-directed RESP to a subscriber if both of the following apply:

(

a) the trade is made by any of the following:

(

i) a dealing representative of a mutual fund dealer who is acting on behalf of the mutual fund dealer;

(ii) a Canadian financial institution;

(iii) in Ontario, a financial intermediary;

(

b) the self-directed RESP restricts its investments in securities to securities in which the person or company who trades the self-directed RESP is permitted to trade.

8.20 Exchange contract — Alberta, British Columbia, New Brunswick and Saskatchewan

(1) In Alberta, British Columbia and New Brunswick, the dealer registration requirement does not apply in respect of the following trades in exchange contracts:

(

a) a trade by a person or company made

(

i) solely through an agent who is a registered dealer, if the dealer is registered in a category that permits the trade, or

(ii) to a registered dealer who is purchasing as principal, if the dealer is registered in a category that permits the trade;

(

b) subject to subsection (2), a trade resulting from an unsolicited order placed with an individual who is not a resident of, and does not carry on business in, the local jurisdiction.

(2) An individual referred to in subsection (1) (

b) must not do any of the following:

(

a) advertise or engage in promotional activity that is directed to persons or companies in the local jurisdiction during the 6 months preceding the trade;

(

b) pay any commission or finder's fee to any person or company in the local jurisdiction in connection with the trade.

(3) In Saskatchewan, the dealer registration requirement does not apply in respect of either of the following:

(

a) a trade in an exchange contract made solely through an agent who is a registered dealer, if the dealer is registered in a category that permits the trade;

(

b) a trade in an exchange contract made to a registered dealer who is purchasing as principal, if the dealer is registered in a category that permits the trade.

8.21 Specified debt

(1) In this

section

"approved credit rating" has the same meaning as in National Instrument 81-102 Mutual Funds ;

"approved credit rating organization" has the same meaning as in National Instrument 81-102 Mutual Funds ;

"permitted supranational agency" means any of the following:

(

a) the African Development Bank, established by the Agreement Establishing the African Development Bank which came into force on September 10, 1964, that Canada became a member of on December 30, 1982;

(

b) the Asian Development Bank, established under a resolution adopted by the United Nations Economic and Social Commission for Asia and the Pacific in 1965;

(

c) the Caribbean Development Bank, established by the Agreement Establishing the Caribbean Development Bank which came into force on January 26, 1970, as amended, that Canada is a founding member of;

(

d) the European Bank for Reconstruction and Development, established by the Agreement Establishing the European Bank for Reconstruction and Development and approved by the European Bank for Reconstruction and Development Agreement Act (Canada), that Canada is a founding member of;

(

e) the Inter-American Development Bank, established by the Agreement establishing the Inter-American Development Bank which became effective December 30, 1959, as amended from time to time, that Canada is a member of;

(

f) the International Bank for Reconstruction and Development, established by the Agreement for an International Bank for Reconstruction and Development approved by the Bretton Woods and Related Agreements Act (Canada);

(

g) the International Finance Corporation, established by Articles of Agreement approved by the Bretton Woods and Related Agreements Act (Canada).

(2) The dealer registration requirement does not apply in respect of a trade in any of the following:

(

b) a debt security issued by or guaranteed by a government of a foreign jurisdiction if the debt security has an approved credit rating from an approved credit rating organization;

(

c) a debt security issued by or guaranteed by a municipal corporation in Canada;

(

d) a debt security secured by or payable out of rates or taxes levied under the law of a jurisdiction of Canada on property in the jurisdiction and collectible by or through the municipality in which the property is situated;

(

e) a debt security issued by or guaranteed by a Canadian financial institution or a

Schedule III bank, other than debt securities that are subordinate in right of payment to deposits held by the issuer or guarantor of those debt securities;

(

f) a debt security issued by the Comité de gestion de la taxe scolaire de l'île de Montréal;

(

g) a debt security issued by or guaranteed by a permitted supranational agency if the debt securities are payable in the currency of Canada or the United States of America.

(3) Paragraphs (2) (a), (

c) and (

d) do not apply in Ontario.

Note: In Ontario, exemptions from the dealer registration requirement similar to those in paragraphs 8.21 (a), (

c) and (

d) are provided under paragraph 2 of subsection 35 (1) of the Securities Act (Ontario).

8.22 Small security holder selling and purchase arrangements

(1) In this

section

"exchange" means

(

a) TSX Inc.,

(

b) TSX Venture Exchange Inc., or

(

c) an exchange that

(

i) has a policy that is substantially similar to the policy of the TSX Inc., and

(ii) is designated by the securities regulatory authority for the purpose of this section;

"policy" means,

(

a) in the case of TSX Inc., sections 638 and 639 [Odd lot selling and purchase arrangements] of the TSX Company Manual, as amended from time to time,

(

b) in the case of the TSX Venture Exchange Inc., Policy 5.7 Small Shareholder Selling and Purchase Arrangements, as amended from time to time, or

(

c) in the case of an exchange referred to in paragraph (

c) of the definition of "exchange", the rule, policy or other similar instrument of the exchange on small shareholder selling and purchase arrangements.

(2) The dealer registration requirement does not apply in respect of a trade by an issuer or its agent, in securities of the issuer that are listed on an exchange, if all of the following apply:

(

a) the trade is

an act in furtherance of participation by the holders of the securities in an arrangement that is in accordance with the policy of that exchange;

(

b) the issuer and its agent do not provide advice to a security holder about the security holder's participation in the arrangement referred to in paragraph (a), other than a description of the arrangement's operation, procedures for participation in the arrangement, or both;

(

c) the trade is made in accordance with the policy of that exchange, without resort to an exemption from, or variation of, the significant subject matter of the policy;

(

d) at the time of the trade after giving effect to a purchase under the arrangement, the market value of the maximum number of securities that a security holder is permitted to hold in order to be eligible to participate in the arrangement is not more than $25 000.

(3) For the purposes of subsection (2) (c), an exemption from, or variation of, the maximum number of securities that a security holder is permitted to hold under a policy in order to be eligible to participate in the arrangement provided for in the policy is not an exemption from, or variation of, the significant subject matter of the policy.

Division 2 — Exemptions from adviser registration

8.23 Dealer without discretionary authority

The adviser registration requirement does not apply to a registered dealer, or a dealing representative acting on behalf of the dealer, that provides advice to a client if the advice is

(

a) in connection with a trade in a security that the dealer and the representative are permitted to make under his, her or its registration,

(

b) provided by the representative, and

(

c) not in respect of a managed account of the client.

8.24 IIROC members with discretionary authority

The adviser registration requirement does not apply to a registered dealer, or a dealing representative acting on behalf of the dealer, that acts as an adviser in respect of a client's managed account if the registered dealer is a member of IIROC and the advising activities are conducted in accordance with the rules of IIROC.

8.25 Advising generally

(1) For the purposes of subsections (3) and (4), "financial or other interest" includes the following:

(

a) ownership, beneficial or otherwise, in the security or in another security issued by the same issuer;

(

b) an option in respect of the security or another security issued by the same issuer;

(

c) a commission or other compensation received, or expected to be received, from any person or company in connection with the trade in the security;

(

d) a financial arrangement regarding the security with any person or company;

(

e) a financial arrangement with any underwriter or other person or company who has any interest in the security.

(2) The adviser registration requirement does not apply to a person or company that acts as an adviser if the advice the person or company provides does not purport to be tailored to the needs of the person or company receiving the advice.

(3) If a person or company that is exempt under subsection (2) recommends buying, selling or holding a specified security, a class of securities or the securities of a class of issuers in which any of the following has a financial or other interest, the person or company must disclose the interest concurrently with providing the advice:

(

a) the person or company;

(

b) any partner, director or officer of the person or company;

(

c) any other person or company that would be an insider of the first-mentioned person or company if the first-mentioned person or company were a reporting issuer.

(4) If the financial or other interest of the person or company includes an interest in an option described in paragraph (

b) of the definition of "financial or other interest" in subsection (1), the disclosure required by subsection (3) must include a description of the terms of the option.

(5) This

section does not apply in Ontario.

Note: In Ontario, measures similar to those in

section 7.24 are in

section 34 of the Securities Act (Ontario).

8.26 International adviser

(1) Despite

section 1.2, in Alberta, British Columbia, New Brunswick and Saskatchewan, a reference to "securities" in this

section excludes "exchange contracts".

(2) In this

section

"aggregate consolidated gross revenue" does not include the gross revenue of an affiliate of the adviser if the affiliate is registered in a jurisdiction of Canada;

"foreign security" means

(

a) a security issued by an issuer incorporated, formed or created under the laws of a foreign jurisdiction, and

(

b) a security issued by a government of a foreign jurisdiction;

"permitted client" has the meaning given to the term in

section 1.1 [definitions] except that it excludes a person or company registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer.

(3) The adviser registration requirement does not apply to a person or company in respect of its acting as an adviser to a permitted client if the adviser does not advise in Canada on securities of Canadian issuers, unless providing that advice is incidental to its providing advice on a foreign security.

(4) The exemption under subsection (3) is not available unless all of the following apply:

(

a) the adviser's head office or principal place of business is in a foreign jurisdiction;

(

b) the adviser is registered, or operates under an exemption from registration, under the securities legislation of the foreign jurisdiction in which its head office or principal place of business is located, in a category of registration that permits it to carry on the activities in that jurisdiction that registration as an adviser would permit it to carry on in the local jurisdiction;

(

c) the adviser engages in the business of an adviser in the foreign jurisdiction in which its head office or principal place of business is located;

(

d) during its most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the adviser, its affiliates and its affiliated partnerships was derived from the portfolio management activities of the adviser, its affiliates and its affiliated partnerships in Canada;

(

e) before advising a client, the adviser notifies the client of all of the following:

(

i) the adviser is not registered in Canada;

(ii) the jurisdiction of residence of the adviser;

(iii) the name and address of the adviser's agent for service of process in the local jurisdiction;

(iv) that there may be difficulty enforcing legal rights against the adviser because it is resident outside Canada and all or substantially all of its assets may be situated outside of Canada;

(

f) the adviser has submitted to the securities regulatory authority a completed Form 31-103F2 Submission to Jurisdiction and Appointment of Agent for Service .

(5) A person or company relying on subsection (3) must notify the regulator 12 months after it first submits a Form 31-103F2 under paragraph (4) (f), and each year thereafter, if it continues to rely on subsection (3).

(6) In Ontario, subsection (5) does not apply to a person or company that complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees .

Division 3 — Exemptions from investment fund manager registration

8.27 Private investment club

The investment fund manager registration requirement does not apply to a person or company in respect of its acting as an investment fund manager for an investment fund if all of the following apply:

(

a) the fund has no more than 50 beneficial security holders;

(

b) the fund does not seek and has never sought to borrow money from the public;

(

c) the fund does not distribute and has never distributed its securities to the public;

(

d) the fund does not pay or give any remuneration for investment management or administration advice in respect of trades in securities, except normal brokerage fees;

(

e) the fund, for the purpose of financing its operations, requires security holders to make contributions in proportion to the value of the securities held by them.

8.28 Capital accumulation plan exemption

(1) In this section, "capital accumulation plan" means a tax assisted investment or savings plan, including a defined contribution registered pension plan, a group registered retirement savings plan, a group registered education savings plan, or a deferred profit-sharing plan, established by a plan sponsor that permits a member to make investment decisions among two or more investment options offered within the plan, and in Quebec and Manitoba, includes a simplified pension plan.

(2) The investment fund manager registration requirement does not apply to a person or company that acts as an investment fund manager for an investment fund if the person or company is only required to be registered as an investment fund manager because the investment fund is an investment option in a capital accumulation plan.

8.29 Private investment fund — loan and trust pools

(1) The investment fund manager registration requirement does not apply to a trust company or trust corporation that administers an investment fund if all of the following apply:

(

a) the trust company or trust corporation is registered or authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(

b) the fund has no promoter or investment fund manager other than the trust company or trust corporation;

(

c) the fund commingles the money of different estates and trusts for the purpose of facilitating investment.

(2) The exemption in subsection (1) is not available to a trust company or trust corporation registered under the laws of Prince Edward Island unless it is also registered under the Trust and Loan Companies Act (Canada) or under comparable legislation in another jurisdiction of Canada.

Division 4 — Mobility exemption — firms

8.30 Client mobility exemption — firms

The dealer registration requirement and the adviser registration requirement do not apply to a person or company if all of the following apply:

(

a) the person or company is registered as a dealer or adviser in its principal jurisdiction;

(

b) the person or company does not act as a dealer, underwriter or adviser in the local jurisdiction other than as it is permitted to in its principal jurisdiction according to its registration;

(

c) the person or company does not act as a dealer, underwriter or adviser in the local jurisdiction other than in respect of 10 or fewer eligible clients;

(

d) the person or company complies with Parts 13 [dealing with clients — individuals and firms] and 14 [handling client accounts — firms] ;

(

e) the person or company deals fairly, honestly and in good faith in the course of its dealings with an eligible client.

Part 9 — Membership in a Self-regulatory Organization

9.1 IIROC membership for investment dealers

An investment dealer must not act as a dealer unless the investment dealer is a "Dealer Member", as defined under the rules of IIROC.

9.2 MFDA membership for mutual fund dealers

Except in Québec, a mutual fund dealer must not act as a dealer unless the mutual fund dealer is a "member", as defined under the rules of the MFDA.

9.3 Exemptions from certain requirements for SRO members

(1) An investment dealer that is a member of IIROC is exempt from the following requirements to the extent the provisions apply to the activities of an investment dealer:

(

a) section 12.1 [capital requirements] ;

(

b) section 12.2 [notifying the regulator of a subordination agreement] ;

(

c) section 12.3 [insurance — dealer] ;

(

d) section 12.6 [global bonding or insurance] ;

(

e) section 12.7 [notifying the regulator of a change, claim or cancellation] ;

(

f) section 12.10 [annual financial statements] ;

(

g) section 12.11 [interim financial information] ;

(

h) section 12.12 [delivering financial information — dealer] ;

(

i) subsection 13.2 (3) [know your client] ;

(

j) section 13.3 [suitability] ;

(

k) section 13.12 [restriction on lending to clients] ;

(

l) section 13.13 [disclosure when recommending the use of borrowed money] ;

(

m) subsection 14.2 (2) [relationship disclosure information] ;

(

n) section 14.6 [holding client assets in trust] ;

(

o) section 14.8 [securities subject to a safekeeping agreement] ;

(

p) section 14.9 [securities not subject to a safekeeping agreement] ;

(

q) section 14.12 [content and delivery of trade confirmation] .

(2) Despite subsection (1), if a registered firm is a member of IIROC and is registered as an investment fund manager, the firm is not exempt from the following requirements:

(

a) section 12.1 [capital requirements] ;

(

b) section 12.2 [notifying the regulator of a subordination agreement] ;

(

c) section 12.7 [notifying the regulator of a change, claim or cancellation] ;

(

d) section 12.10 [annual financial statements] ;

(

e) section 12.11 [interim financial information] .

(3) A registered firm that is a member of the MFDA is exempt from each requirement listed in subsection (1) that applies to a mutual fund dealer other than the following:

(

a) subsection 13.2 (3) [know your client] ;

(

b) section 13.12 [restriction on lending to clients] .

(4) Despite subsection (3), if a registered firm is a member of the MFDA and is registered as an investment fund manager, the firm is not exempt from the following requirements:

(

a) section 12.1 [capital requirements] ;

(

b) section 12.2 [notifying the regulator of a subordination agreement] ;

(

c) section 12.7 [notifying the regulator of a change, claim or cancellation] ;

(

d) section 12.10 [annual financial statements] ;

(

e) section 12.11 [interim financial information] .

(5) Subsection (3) does not apply in Québec.

(6) In Québec, the requirements listed in subsection (1), other than subsection 13.2 (3) [know your client] and

section 13.12 [restriction on lending to clients] do not apply to a mutual fund dealer if the registrant complies with the applicable regulations on mutual fund dealer in Québec.

Part 10 — Suspension and Revocation of Registration — Firms

Division 1 — When a firm's registration is suspended

10.1 Failure to pay fees

(1) In this section, "annual fees" means

(

a) in Alberta, the fees required under

section 2.1 of the

Schedule — Fees in Alta. Reg. 115/95 — Securities Regulation,

(

b) in British Columbia, the annual fees required under

section 22 of the Securities Regulation, B.C. Reg. 196/97,

(

c) in Manitoba, the fees required under paragraph 1. (2) (

a) of the Manitoba Fee Regulation , M.R 491\88R,

(

d) in New Brunswick, the fees required under

section 2.2 (

c) of Local Rule 11-501 Fees ,

(

e) in Newfoundland and Labrador, the fees required under

section 143 of the Securities Act ,

(

f) in Nova Scotia, the fees required under

Part XIV of the Regulations,

(

g) in Northwest Territories, the fees required under sections 1 (

c) and 1 (

e) of the Securities Fee regulations, R-066-2008;

(

h) in Nunavut, the fees required under

section 1 (

a) of the

Schedule to R-003-2003 to the Securities Fee regulation, R.R.N.W.T. 1990, c.20,

(

i) in Prince Edward Island, the fees required under

section 175 of the Securities Act R.S.P.E.I., Cap. S-3.1,

(

j) in Québec, the fees required under

section 271.5 of the Québec Securities Regulation,

(

k) in Saskatchewan, the annual registration fees required to be paid by a registrant under

section 176 of The Securities Regulations (Saskatchewan), and

(

l) in Yukon, the fees required under O.I.C. 2009\66, pursuant to

section 168 of the Securities Act .

(2) If a registered firm has not paid the annual fees by the 30th day after the date the annual fees were due, the registration of the firm is suspended until reinstated or revoked under securities legislation.

10.2 If IIROC membership is revoked or suspended

If IIROC revokes or suspends a registered firm's membership, the firm's registration in the category of investment dealer is suspended until reinstated or revoked under securities legislation.

10.3 If MFDA membership is revoked or suspended

Except in Québec, if the MFDA revokes or suspends a registered firm's membership, the firm's registration in the category of mutual fund dealer is suspended until reinstated or revoked under securities legislation.

10.4 Activities not permitted while a firm's registration is suspended

If a registered firm's registration in a category is suspended, the firm must not act as a dealer, an underwriter, an adviser, or an investment fund manager, as the case may be, under that category.

Division 2 — Revoking a firm's registration

10.5 Revocation of a suspended registration — firm

If a registration has been suspended under this Part and it has not been reinstated, the registration is revoked on the 2nd anniversary of the suspension.

10.6 Exception for firms involved in a hearing

Despite

section 10.5, if a hearing concerning a suspended registrant is commenced under securities legislation or under the rules of an SRO, the registrant's registration remains suspended.

10.7 Application of

Part 10 in Ontario

Other than

section 10.4 [activities not permitted while a firm's registration is suspended] , this Part does not apply in Ontario.

Note: In Ontario, measures governing suspension in

section 29 of the Securities Act (Ontario) are similar to those in Parts 6 and 10.

Part 11 —Internal Controls and Systems

Division 1 — Compliance

11.1 Compliance system

A registered firm must establish, maintain and apply policies and procedures that establish a system of controls and supervision sufficient to

(

a) provide reasonable assurance that the firm and each individual acting on its behalf complies with securities legislation, and

(

b) manage the risks associated with its business in accordance with prudent business practices.

11.2 Designating an ultimate designated person

(1) A registered firm must designate an individual who is registered under securities legislation in the category of ultimate designated person to perform the functions described in

section 5.1 [responsibilities of the ultimate designated person] .

(2) A registered firm must not designate an individual to act as the firm's ultimate designated person unless the individual is one of the following:

(

a) the chief executive officer or sole proprietor of the registered firm;

(

b) an officer in charge of a division of the registered firm, if the activity that requires the firm to register occurs only within the division;

(

c) an individual acting in a capacity similar to that of an officer described in paragraph (

a) or (b).

(3) If an individual who is registered as a registered firm's ultimate designated person ceases to meet any of the conditions listed in subsection (2), the registered firm must designate another individual to act as its ultimate designated person.

11.3 Designating a chief compliance officer

(1) A registered firm must designate an individual who is registered under securities legislation in the category of chief compliance officer to perform the functions described in

section 5.2 [responsibilities of the chief compliance officer] .

(2) A registered firm must not designate an individual to act as the firm's chief compliance officer unless the individual has satisfied the applicable conditions in

Part 3 [registration requirements — individuals] and the individual is one of the following:

(

a) an officer or partner of the registered firm;

(

b) the sole proprietor of the registered firm.

(3) If an individual who is registered as a registered firm's chief compliance officer ceases to meet any of the conditions listed in subsection (2), the registered firm must designate another individual to act as its chief compliance officer.

11.4 Providing access to board

A registered firm must permit its ultimate designated person and its chief compliance officer to directly access the firm's board of directors, or individuals acting in a similar capacity for the firm, at such times as the ultimate designated person or the chief compliance officer may consider necessary or advisable in view of his or her responsibilities.

Division 2 — Books and records

11.5 General requirements for records

(1) A registered firm must maintain records to

(

a) accurately record its business activities, financial affairs, and client transactions, and

(

b) demonstrate the extent of the firm's compliance with applicable requirements of securities legislation.

(2) The records required under subsection (1) include, but are not limited to, records that do the following:

(

a) permit timely creation and audit of financial statements and other financial information required to be filed or delivered to the securities regulatory authority;

(

b) permit determination of the registered firm's capital position;

(

c) demonstrate compliance with the registered firm's capital and insurance requirements;

(

d) demonstrate compliance with internal control procedures;

(

e) demonstrate compliance with the firm's policies and procedures;

(

f) permit the identification and segregation of client cash, securities, and other property;

(

g) identify all transactions conducted on behalf of the registered firm and each of its clients, including the parties to the transaction and the terms of the purchase or sale;

(

h) provide an audit trail for

(

i) client instructions and orders, and

(ii) each trade transmitted or executed for a client or by the registered firm on its own behalf;

(

i) permit the generation of account activity reports for clients;

(

j) provide securities pricing as may be required by securities legislation;

(

k) document the opening of client accounts, including any agreements with clients;

(

l) demonstrate compliance with sections 13.2 [know your client] and 13.3 [suitability] ;

(

m) demonstrate compliance with complaint-handling requirements;

(

n) document correspondence with clients;

(

o) document compliance and supervision actions taken by the firm.

(1) A registered firm must keep a record that it is required to keep under securities legislation

(

a) for 7 years from the date the record is created,

(

b) in a safe location and in a durable form, and

(

c) in a manner that permits it to be provided to the regulator or the securities regulatory authority in a reasonable period of time.

(2) A record required to be provided to the regulator or the securities regulatory authority must be provided in a format that is capable of being read by the regulator or the securities regulatory authority.

(3) Paragraph (1) (

c) does not apply in Ontario.

Note: In Ontario, how quickly a registered firm is required to provide information to the regulator is addressed in subsection 19 (3) of the Securities Act (Ontario).

Division 3 — Certain business transactions

11.7 Tied settling of securities transactions

A registered firm must not require a person or company to settle that person's or company's transaction with the registered firm through that person's or company's account at a Canadian financial institution as a condition, or on terms that would appear to a reasonable person to be a condition, of supplying a product or service, unless this method of settlement would be, to a reasonable person, necessary to provide the specific product or service that the person or company has requested.

11.8 Tied selling

A dealer, adviser or investment fund manager must not require another person or company

(

a) to buy, sell or hold a security as a condition, or on terms that would appear to a reasonable person to be a condition, of supplying or continuing to supply a product or service, or

(

b) to buy, sell or use a product or service as a condition, or on terms that would appear to a reasonable person to be a condition, of buying or selling a security.

11.9 Registrant acquiring a registered firm's securities or assets

(1) A registrant must give the regulator written notice in accordance with subsection (2) if it proposes to acquire any of the following:

(

a) beneficial ownership of, or direct or indirect control or direction over, a security of a registered firm;

(

b) beneficial ownership of, or direct or indirect control or direction over, a security of a person or company of which a registered firm is a subsidiary;

(

c) all or a substantial part of the assets of a registered firm.

(2) The notice required under subsection (1) must be delivered to the regulator at least 30 days before the proposed acquisition and must include all relevant facts regarding the acquisition sufficient to enable the regulator to determine if the acquisition is

(

a) likely to give rise to a conflict of interest,

(

b) likely to hinder the registered firm in complying with securities legislation,

(

c) inconsistent with an adequate level of investor protection, or

(

d) otherwise prejudicial to the public interest.

(3) Subsection (1) does not apply to the following:

(

a) a proposed acquisition in connection with an amalgamation, merger, arrangement, reorganization or treasury issue if the beneficial ownership of, or direct or indirect control or direction over, the person or company whose security is to be acquired will not change;

(

b) a registrant who, alone or in combination with any other person or company, proposes to acquire securities that, together with the securities already beneficially owned, or over which direct or indirect control or direction is already exercised, do not exceed more than 10% of any class or series of securities that are listed and posted for trading on an exchange.

(4) Except in Ontario and British Columbia, if, within 30 days of the regulator's receipt of a notice under subsection (1), the regulator notifies the registrant making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(5) In Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1) (

a) or (c), the regulator notifies the registrant making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(6) Following receipt of a notice of objection under subsection (4) or (5), the person or company who submitted the notice to the regulator may request an opportunity to be heard on the matter.

11.10 Registered firm whose securities are acquired

(1) A registered firm must give the regulator written notice in accordance with subsection (2) if it knows or has reason to believe that any person or company, alone or in combination with any other person or company, is about to acquire, or has acquired, beneficial ownership of, or direct or indirect control or direction over, 10% or more of any class or series of voting securities of any of the following:

(

a) the registered firm;

(

b) a person or company of which the registered firm is a subsidiary.

(2) The notice required under subsection (1) must,

(

a) be delivered to the regulator as soon as possible,

(

b) include the name of each person or company involved in the acquisition, and

(

c) after the registered firm has applied reasonable efforts to gather all relevant facts, include facts regarding the acquisition sufficient to enable the regulator to determine if the acquisition is

(

i) likely to give rise to a conflict of interest,

(ii) likely to hinder the registered firm in complying with securities legislation,

(iii) inconsistent with an adequate level of investor protection, or

(iv) otherwise prejudicial to the public interest.

(3) This

section does not apply to an amalgamation, merger, arrangement, reorganization or treasury issue in which the beneficial ownership of a registered firm does not change.

(4) This

section does not apply if notice of the transaction was provided under

section 11.9 [registrant acquiring a registered firm's securities or assets] .

(5) Except in British Columbia and Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1), the regulator notifies the person or company making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(6) In Ontario, if, within 30 days of the regulator's receipt of a notice under subsection (1) (a), the regulator notifies the person or company making the acquisition that the regulator objects to the acquisition, the acquisition must not occur until the regulator approves it.

(7) Following receipt of a notice of objection under subsection (5) or (6), the person or company proposing to make the acquisition may request an opportunity to be heard on the matter.

Part 12 — Financial Condition

Division 1 — Working capital

12.1 Capital requirements

(1) If, at any time, the excess working capital of a registered firm, as calculated using Form 31-103F1 Calculation of Excess Working Capital , is less than zero, the registered firm must notify the regulator as soon as possible.

(2) A registered firm must ensure that its excess working capital, as calculated using Form 31-103F1 Calculation of Excess Working Capital , is not less than zero for 2 consecutive days.

(3) For the purpose of completing Form 31-103F1 Calculation of Excess Working Capital , the minimum capital is

(a) $25,000, for a registered adviser that is not also a registered dealer or a registered investment fund manager,

(b) $50,000, for a registered dealer that is not also a registered investment fund manager, and

(c) $100,000, for a registered investment fund manager.

(4) Paragraph (3) (

c) does not apply to a registered investment fund manager that is exempt from the dealer registration requirement under

section 8.6 [adviser — non-prospectus qualified investment fund] in respect of all investment funds for which it acts as adviser.

12.2 Notifying the regulator of a subordination agreement

If a registered firm has executed a subordination agreement, the effect of which is to exclude an amount from its long-term related party debt as calculated on Form 31-103F1 Calculation of Excess Working Capital , the firm must notify the regulator 5 days before it

(

a) repays the loan or any part of the loan, or

(

b) terminates the agreement.

Division 2 — Insurance

12.3 Insurance — dealer

(1) A registered dealer must maintain bonding or insurance

(

a) that contains the clauses set out in Appendix A [bonding and insurance clauses] , and

(

b) that provides for a double aggregate limit or a full reinstatement of coverage.

(2) A registered dealer must maintain bonding or insurance in respect of each clause set out in Appendix A and in the highest of the following amounts for each clause:

(a) $50,000 per employee, agent and dealing representative or $200,000, whichever is less;

(

b) one per cent of the total client assets that the dealer holds or has access to, as calculated using the dealer's most recent financial records, or $25,000,000, whichever is less;

(

c) one per cent of the dealer's total assets, as calculated using the dealer's most recent financial records, or $25,000,000, whichever is less;

(

d) the amount determined to be appropriate by a resolution of the dealer's board of directors, or individuals acting in a similar capacity for the firm.

(3) In Québec, this

section does not apply to a scholarship plan dealer or a mutual fund dealer registered only in Québec.

12.4 Insurance — adviser

(1) A registered adviser must maintain bonding or insurance

(

a) that contains the clauses set out in Appendix A [bonding and insurance clauses] , and

(

b) that provides for a double aggregate limit or a full reinstatement of coverage.

(2) A registered adviser that does not hold or have access to client assets must maintain bonding or insurance in respect of each clause set out in Appendix A and in the amount of $50,000 for each clause.

(3) A registered adviser that holds or has access to client assets must maintain bonding or insurance in respect of each clause set out in Appendix A and in the highest of the following amounts for each clause:

(

a) one per cent of assets under management that the adviser holds or has access to, as calculated using the adviser's most recent financial records, or $25,000,000, whichever is less;

(

b) one per cent of the adviser's total assets, as calculated using the adviser's most recent financial records, or $25,000,000, whichever is less;

(c) $200,000;

(

d) the amount determined to be appropriate by a resolution of the adviser's board of directors or individuals acting in a similar capacity for the firm.

12.5 Insurance — investment fund manager

(1) A registered investment fund manager must maintain bonding or insurance

(

a) that contains the clauses set out in Appendix A [bonding and insurance clauses] , and

(

b) that provides for a double aggregate limit or a full reinstatement of coverage.

(2) A registered investment fund manager must maintain bonding or insurance in respect of each clause set out in Appendix A and in the highest of the following amounts for each clause:

(

a) one per cent of assets under management, as calculated using the investment fund manager's most recent financial records, or $25,000,000, whichever is less;

(

b) one per cent of the investment fund manager's total assets, as calculated using the investment fund manager's most recent financial records, or $25,000,000, whichever is less;

(c) $200,000;

(

d) the amount determined to be appropriate by a resolution of the investment fund manager's board of directors or individuals acting in a similar capacity for the firm.

12.6 Global bonding or insurance

A registered firm may not maintain bonding or insurance under this Division that benefits, or names as an insured, another person or company unless the bond provides, without regard to the claims, experience or any other factor referable to that other person or company, the following:

(

a) the registered firm has the right to claim directly against the insurer in respect of losses, and any payment or satisfaction of those losses must be made directly to the registered firm;

(

b) the individual or aggregate limits under the policy may only be affected by claims made by or on behalf of

(

i) the registered firm, or

(ii) a subsidiary of the registered firm whose financial results are consolidated with those of the registered firm.

12.7 Notifying the regulator of a change, claim or cancellation

A registered firm must, as soon as possible, notify the regulator in writing of any change in, claim made under, or cancellation of any insurance policy required under this Division.

Division 3 —Audits

12.8 Direction by a regulator to conduct an audit or review

A registered firm must direct its auditor in writing to conduct any audit or review required by the regulator during its registration and must submit a copy of the direction to the regulator

(

a) with its application for registration, and

(

b) no later than the 7th day after the registered firm changes its auditor.

12.9 Co-operating with the auditor

A registrant must not withhold, destroy or conceal any information or documents or otherwise fail to cooperate with a reasonable request made by an auditor of the registered firm in the course of an audit.

Division 4 — Financial reporting

12.10 Annual financial statements

(1) The annual financial statements delivered to the regulator under this Division must include the following:

(

a) an income statement, a statement of retained earnings and a cash flow statement, each prepared for the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any;

(

b) a balance sheet, signed by at least one director of the registered firm, as at the end of the most recently completed financial year and the financial year immediately preceding the most recently completed financial year, if any;

(

c) notes to the financial statements.

(2) The annual financial statements delivered to the regulator under this Division must be audited.

(3) The annual financial statements delivered to the regulator under this Division must be prepared in accordance with National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency , except that the statements must be prepared on a non-consolidated basis.

12.11 Interim financial information

(1) The interim financial information delivered to the regulator under this Division may be limited to the following:

(

a) an income statement for the interim period and for the same period of the immediately preceding financial year, if any;

(

b) a balance sheet, signed by at least one director of the registered firm, as at the end of the interim period and for the same period of the immediately preceding financial year, if any.

(2) The interim financial information delivered to the regulator under this Division must be prepared using the same accounting principles that the registered firm uses to prepare its annual financial statements.

12.12 Delivering financial information — dealer

(1) A registered dealer must deliver the following to the regulator no later than the 90th day after the end of its financial year:

(

a) its annual financial statements for the financial year;

(

b) a completed Form 31-103F1 Calculation of Excess Working Capital , showing the calculation of the dealer's excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any.

(2) A registered dealer must deliver the following to the regulator no later than the 30th day after the end of the first, second and third quarter of its financial year:

(

a) its interim financial information for the quarter;

(

b) a completed Form 31-103F1 Calculation of Excess Working Capital , showing the calculation of the dealer's excess working capital as at the end of the quarter and as at the end of the immediately preceding quarter, if any.

(3) Subsection (2) does not apply to an exempt market dealer.

12.13 Delivering financial information — adviser

A registered adviser must deliver the following to the regulator no later than the 90th day after the end of its financial year:

(

a) its annual financial statements for the financial year;

(

b) a completed Form 31-103F1 Calculation of Excess Working Capital , showing the calculation of the adviser's excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any.

12.14 Delivering financial information — investment fund manager

(1) A registered investment fund manager must deliver the following to the regulator no later than the 90th day after the end of its financial year:

(

a) its annual financial statements for the financial year;

(

b) a completed Form 31-103F1 Calculation of Excess Working Capital , showing the calculation of the investment fund manager's excess working capital as at the end of the financial year and as at the end of the immediately preceding financial year, if any;

(

c) a description of any net asset value adjustment made in respect of an investment fund managed by the investment fund manager during the financial year.

(2) A registered investment fund manager must deliver the following to the regulator no later than the 30th day after the end of the first, second and third quarter of its financial year:

(

a) its interim financial information for the quarter;

(

b) a completed Form 31-103F1 Calculation of Excess Working Capital , showing the calculation of the investment fund manager's excess working capital as at the end of the quarter and as at the end of the immediately preceding quarter, if any;

(

c) a description of any net asset value adjustment made in respect of an investment fund managed by the investment fund manager during the quarter.

(3) A description of a net asset value adjustment referred to in this

section must include the following:

(

a) the name of the fund;

(

b) assets under administration of the fund;

(

c) the cause of the adjustment;

(

d) the dollar amount of the adjustment;

(

e) the effect of the adjustment on net asset value per unit or share and any corrections made to purchase and sale transactions affecting either the investment fund or security holders of the investment fund.

Part 13 — Dealing with Clients — Individuals and Firms

Division 1 —Know your client and suitability

13.1 Investment fund managers exempt from this Division

This Division does not apply to an investment fund manager.

13.2 Know your client

(1) For the purpose of paragraph 2 (

b) in Ontario, Nova Scotia and New Brunswick, "insider" has the meaning ascribed to that term in the Securities Act except that "reporting issuer", as it appears in the definition of "insider", is to be read as "reporting issuer or any other issuer whose securities are publicly traded".

(2) A registrant must take reasonable steps to

(

a) establish the identity of a client and, if the registrant has cause for concern, make reasonable inquiries as to the reputation of the client,

(

b) establish whether the client is an insider of a reporting issuer or any other issuer whose securities are publicly traded,

(

c) ensure that it has sufficient information regarding all of the following to enable it to meet its obligations under

section 13.3 or, if applicable, the suitability requirement imposed by an SRO:

(

i) the client's investment needs and objectives;

(ii) the client's financial circumstances;

(iii) the client's risk tolerance, and

(

d) establish the creditwort