Firms and individuals located/residing in Ontario that trade to, with, or on behalf of, or advise U.S. resident clients may be required to be registered in Ontario, regardless of the client not residing in Ontario.
The Ontario Securities Commission (OSC) is proposing dealer and adviser registration relief for U.S. broker-dealers and U.S. advisers servicing U.S. clients from Ontario, in the form of OSC Rule 32-505 Conditional Exemption from Registration for United States Broker-Dealers and Advisers Servicing U.S. Clients from Ontario (the Rule). The Rule was delivered to the Minister of Finance on April 23, 2015 and is expected to come into force July 7, 2015.
The exemption set out in the Rule, will be available to U.S. broker-dealers and the representatives acting on their behalf (Brokers), and to U.S. adviser firms and the representatives acting on their behalf (Advisers) (collectively, Brokers and Advisers) and is subject to conditions as set out below.
Brokers and Advisers may rely on the exemption set out in the Rule if they
- are appropriately registered in the United States to trade for U.S. residents or advise U.S. residents, or are relying on an exemption from registration under U.S. federal securities laws;
- do not trade, directly or indirectly, for an Ontario resident or advise an Ontario resident without appropriate registration or an exemption from the applicable registration requirement under Ontario securities laws; and
- have filed Form 32-505F1 Information Report for United States Broker-Dealers and Advisers Servicing U.S. Clients from Ontario (Form 32-505F1) with the OSC, and an updated Form 32-505F1 is filed with the OSC within 10 days of any changes to the information previously filed.
Brokers or Advisers that rely on the exemption set out in the Rule will become a market participant as defined under subsection 1(1) of the Securities Act (Ontario) (the Act) and therefore subject to Ontario securities laws with respect to record-keeping and compliance reviews, as set out in Part VII of the Act.
The Rule will align with the blanket orders issued by the other 12 Canadian jurisdictions on March 26, 2015, exempting Brokers and Advisers from the dealer/adviser registration requirement in the applicable local jurisdiction, and subject to substantially the same conditions set out above.