On June 12, 2009, the Canadian Securities Administrators (the "CSA") published CSA Staff Notice 31-311 (the "Staff Notice") to provide those in the business of trading and advising in securities with guidance concerning the transition from the existing registration rules to the new registration regime proposed under National Instrument 31-103 Registration Requirements and Exemptions ("NI 31-103").

NI 31-103 was last published for comment on February 29, 2008 and is subject to final approval by securities regulatory authorities and governments in certain jurisdictions. If approved, CSA staff expect to publish NI 31-103 in final form on or about July 17, 2009. The proposed date for NI 31-103 to come into force is September 28, 2009 (the "Effective Date").

The Staff Notice only reflects what CSA staff is recommending to the relevant securities regulatory authorities and ministries. The Investment Industry Regulatory Organization plans to publish its own notice regarding the conversion of registration categories as a supplement to the Staff Notice.

The Staff Notice can be found on the websites of CSA members.

NRD Freeze

The National Registration Database ("NRD") will be shut down for two weeks from September 25, 2009 to October 12, 2009 (the "Freeze Period"). The purpose of the shut down is to permit the conversion of (i) existing categories of registration to the new categories of registration, and (ii) existing forms to the new proposed forms. NRD will only be accessible by authorized firm representatives in read-only form.

During the Freeze Period reinstatements, termination notices and notices of changes will have to be submitted in paper format and subsequently re-filed on NRD after the Freeze Period. The deadline for such re-filings is November 10, 2009. All other notices required to be submitted during the Freeze Period would have to be filed on NRD no later than November 24, 2009. Applications that were submitted but not approved by the Effective Date will be withdrawn from NRD and a new application using the new forms will be required. The Staff Notice specifies the dates by which applications should be submitted to increase the likelihood of processing before the Effective Date. It should be noted that new firm registrations need to be submitted by June 26 to increase the likelihood that registration is approved before the Freeze Period. Individual applications for registration with an adviser need to be filed by July 15 and August 14 is the cut off date for all other individual registrations. A new application fee for a firm registration will not be imposed if the application was made prior to the Effective Date and not approved by then.

Conversion

The Staff Notice sets out the existing categories of registration and the new categories into which they will be converted during the Freeze Period.

Under NI 31 -103 the definition of permitted individuals will be narrowed in order to capture only the mind and management that directly influences the registered firm. Therefore, junior officers are no longer required to seek approval. Those officers not captured by the revised definition should surrender the permitted activity or be terminated as permitted individuals after the Effective Date. Lists of officers will be generated by CDS Clearing and Depository Services Inc. and those lists will be sent by the regulators to firms after the Effective Date to assist firms with removing officers that are not permitted individuals. Non-refundable NRD user fees will be charged for such individuals if they are not removed from NRD by December 31, 2009. The Staff Notice describes steps that firms can take to avoid such fees.

Transition Timelines

CSA staff have recommended transition time periods to allow firms and individuals to comply with the new requirements. Those timelines are described in detail in the Staff Notice.

Individuals currently registered with a limited market dealer (in Ontario or Newfoundland and Labrador) will have 12 months to satisfy the new proficiency requirements and the NRD record must be updated to reflect that the proficiency requirements have been met. Firms in jurisdictions other than Ontario and Newfoundland and Labrador that act as a dealer in the exempt market prior to the Effective Date will have 12 months to apply for registration and comply with the requirements for an exempt market dealer. There is no transition for firms not active before the Effective Date.

Investment fund managers with a head office in Canada that are active prior to the Effective Date will have 12 months to register in the jurisdiction where the head office is located and 24 months to register in other applicable Canadian jurisdictions. There is no transition for firms not active prior to the Effective Date. Investment fund managers with a head office outside Canada will have 24 months to apply for registration, whether or not they were active prior to the Effective Date. The CSA plans to publish a proposal for comment next year to explain the circumstances under which an investment fund manager with a head office outside Canada would need to register and when a Canadian investment fund manager would need to register in other Canadian jurisdictions in addition to that of its head office.