In addition to the Amendments affecting registrants, generally, summarized below are some of the key changes under the Amendments that will impact mutual fund dealers.
Registered mutual fund dealers are no longer restricted in Quebec from acting as dealers of labour sponsored investment funds or labour sponsored venture capital corporations.
Mutual Fund Dealer-Dealing Representative
In addition to current proficiency requirements, an individual is now also permitted to be registered as a mutual fund dealing representative:
- if he/she is a CFA charter holder and has 12 months of relevant securities experience in the 36 month period prior to applying for registration, or
- if the individual is exempt from section 3.11 (Portfolio Manager Advising Representative) as a result of qualifying for the section 16.10(1) grandfathering exemption (proficiency for dealing and advising representatives).
Chief Compliance Officer
The Chief Compliance Officers Qualifying Examination is recognized as an alternative to the Directors, Officers and Partners Exam (PDO) for both mutual fund and scholarship plan dealers.
An individual may also qualify to be the chief compliance office if he or she is exempt from section 3.13 (Portfolio manager-chief compliance officer) as a result of qualifying for the section 16.9(2) grandfathering exemption (Registration of chief compliance officers).
Exemptions from Certain Requirements
Unless it is also registered as an exempt market dealer, a scholarship plan dealer or an investment fund manager, a MFDA member firm is exempt from certain requirements contained in sections 12 (financial condition), 13 (dealing with clients) and 14 (handling client accounts) of NI 31-103 as itemized in section 9.3 (further proposed amendments to NI 31-103 clarify that in order to rely on the section 9.3 exemptions, the MFDA member firm must be in compliance with its MFDA obligations). Subsection 6 has been added to section 12.1 which provides that a MFDA member firm that is also registered as an exempt market dealer, scholarship plan dealer or investment fund manager is not required to comply with certain of the requirements of section 12.1 provided the firm has a minimum capital as calculated in accordance with MFDA Form 1 MFDA Financial Questionnaire and Report (Form F1) and it meets certain other conditions set out in section 12.1(6).
In Quebec, the requirements do not apply to a mutual fund dealer to the extent equivalent requirements are applicable to the dealer under the Quebec regulations.
The Companion Policy clarifies that firms are still required to comply with the their financial reporting obligations in NI 31-103 even if relying on the new exemptions contained in sections 9.3 and 9.4, as these exemptions do not exempt firms from their registration obligations under other categories of registration. Subject to certain conditions, SRO members that are registered in other categories may be permitted to calculate their working capital in accordance with SRO forms instead of Form 31-103F1 and will be permitted to file same.