On August 31, the British Columbia Securities Commission proposed changes to the conditions of registration for investment dealers that maintain an office in B.C. and trade in U.S. over-the-counter markets, and who have not filed a prescribed form of undertaking. Ultimately, the proposal would expand investment dealers' current reporting requirements to include: (i) clients' jurisdictions when refusing to accept securities of specified OTC issuers; (ii) significant client holdings of shares in specified OTC issuers; and (iii) significant trading in a single specified OTC issuer facilitated by a B.C. investment dealer.
Significantly, the amended conditions would replace the current definition of OTC-quoted securities (which names two marketplaces) with the definition of OTC-quoted securities from Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets (which refers to U.S. OTC markets generally). Therefore, if adopted, firms operating in or through an office in BC, and those firms previously unaffected, will need to consider the implications of the expanded definition of U.S. OTC markets on their reporting obligations.
According to the BCSC, the proposed changes "further address the risk of abusive practices in U.S. OTC markets involving an investment dealer with a BC office." Comments on the proposals are being accepted until October 30, 2012.