On July 17, 2009 the Canadian Securities Administrators (the “CSA”) published in final form National Instrument 31-103 Registration Requirements and Exemptions (the “Rule”), its related companion policy (the “ CP”) and other related rules and amendments.

These instruments harmonize registration requirements across all CSA jurisdictions and the Rule will constitute the primary instrument for regulating dealer, adviser and fund manager registration requirements. However, there are other instruments and legislative requirements that also may apply to registrants depending, in part, on the local jurisdiction. Registrants must also comply with applicable self-regulatory organization requirements. The requirements in the Rule apply to everyone who is registered in any jurisdiction in Canada.

In addition to consolidating and harmonizing various registration requirements across the country, the Rule introduces a number of significant changes to the registration regime in Canada including the following:

“Business Trigger” – Registration will no longer be required for every person or company that trades a security but, rather, only for those who engage in or hold themselves out as engaging in the business of trading in securities.

Investment Fund ManagersInvestment fund managers must now be registered whereas previously an investment fund manager only needed to register if it engaged in trading or advising.

Exempt Market Dealers – A new category of registration, exempt market dealer, is introduced in all jurisdictions. This category of registration will permit a person or company to engage in the business of trading securities related to specified prospectus exemptions (e.g. accredited investors, minimum investment amount); and will be completely new to all jurisdictions except Ontario and Newfoundland & Labrador which previously had a limited market dealer category. Limited market dealers in those two provinces will transition to the new exempt market dealer category and thereby become subject to proficiency, capital and insurance requirements that did not apply to them in the past.

International Dealers and Advisers – The Rule provides registration exemptions for dealers and advisers whose head office or principal place of business is in a foreign jurisdiction. The exemptions are subject to prescribed conditions concerning the type of clients and securities.

Referral Arrangements – The Rule prescribes requirements for any referral arrangements entered into by a registrant. Previously referral arrangements were not subject to specific legislative or rule requirements but, rather, such arrangements were addressed by regulators on the basis of staff policies or interpretations of more general registration requirements.

Transition

The Rule and related instruments are expected to come into force on September 28, 2009. On June 12, 2009, the CSA published CSA Staff Notice 31-311 to describe how the CSA would transition firms and individuals into the new registration regime.

Those individuals or firms currently entitled to rely on discretionary relief from a requirement that is substantially similar to a requirement in the Rule, can continue to rely on that relief to the same extent and subject to the same conditions.

Passport System for Registration

Also on September 28, 2009, a new passport system for dealer and adviser registration in multiple jurisdictions will come into force. The passport system will allow individuals and firms to register in more than one jurisdiction by dealing only with the applicant’s principal regulator.

Amendments to Multilateral Instrument 11-102 Passport System will extend the current passport system for exemptive relief to dealer and adviser registrations. New National Policy 11-204 Process for Registration in Multiple Jurisdictions (“NP 11-204”) will replace the current National Registration System and establish the process for obtaining registration in multiple jurisdictions, including Ontario.

Although Ontario is not a passport jurisdiction, it can be a principal regulator under the system, giving firms and individuals in Ontario access to other jurisdictions by dealing only with the Ontario Securities Commission (the “OSC”). Through NP 11-204 the OSC also has agreed to procedures for registration in multiple jurisdictions that include an interface system for firms and individuals in passport jurisdictions to register in Ontario.

Legislative Amendments

Various legislative amendments have been made as a result of the implementation of the Rule and some of the changes introduced by it (e.g. business trigger for registration). In Ontario amendments to the Securities Act and the Commodity Futures Act were included in Schedules 6 and 26 of the Budget Measures Act, 2009. An overview of the amendments was set out in a notice published by the Ontario Securities Commission on July 3, 2009.