REGISTRATION OF SECURITIES
INDUSTRY PARTICIPANTS
TYPES OF REGISTRATION
FIRMS
NI 31-103 (Ontario Security Act) – requires registration:
- Dealer: trading securities in the capacity of a principal or agent
- Advisor: for portfolio or restricted portfolio manager
- Investment Fund Manager: new registration for those who manage investment fund, including pooled funds.
INDIVIDUALS
- Under NI 31-103 individuals register as “dealing rep” or “advising rep”
- Under IIROC individual register as “Registered Rep” or “Investment Rep” both of them called AI (option and future trading are an additional preferences and need to have notice but not totally new registration)
CATEGORIES OF REGISTRATION
DEALERS
- Investment Dealer: trading in securities in capacity of an agent or principal, member of IIROC. Has authority to act as an underwriter.
- Mutual Fund Dealer: registered exclusively for trading in shares or units of mutual funds. Has to be registered with MFDA (except Quebec)
- Scholarship Plan Dealer: registered to scholarship plan investments
- Exempt Market Dealer: deals in exempt market (private placements). Former Ontario registration of Limited Market Dealer.
- Restricted Dealer: open category
Introducing/Carrying Broker Arrangements
- Carrying brokers – dealers that offer back office services and facilities to other members (introducing dealers)
- Carrying broker services: execution, clearing and settlement of trades, custody of funds and securities, maintain books and records of customer transactions and financing of customer position.
- Introducing dealers’ services: maintain relationship with the client.
There are 4 types of introducing/carrying arrangements:
- Introducing broker takes more responsibility going from T1 to T4
- Under T1, carrying broker has KYC obligations as well as some or all of the sales compliance responsibilities. Compliance with all non-financial requirements is responsibility of both.
- In T2, 3, 4 compliance of non-financial requirements is responsibility of introducing broker (unless otherwise specified in IIROC Rule 35)
- Anti money laundering, issues surrounding KYC and suspicious activity reporting have no guidelines in this regard and provide no exemption for carrying brokers from compliance with all requirements with respect to carried accounts
- Suitability requirements fall on introduction broker, but carry broker may have necessary systems for monitoring transactions and deal directly with client in conducting transactions (deposits, withdrawals, wire transfers)
ADVISORS
- Portfolio Manager: manage investment portfolios of clients through discretionary authority granted by the client
- Restricted Portfolio Manager: act as an advisor in respect of security in accordance with the terms and conditions, restrictions or requirements applied to its registration.
Not need for registration as advisor if advice is not tailored to the needs of the person or company receiving the advice.
EXEMPTIONS FROM REGISTRATION
NI 31-103 provides exemptions from registration.
- Unless person is in the business of trading in securities, the occasional trade will not require registration.
- Purchases through a dealer, or reinvestments of dividends or distributions or by plan administrators.
- Private investment club with fewer than 50 member and small security holder selling and purchasing arrangements
- If advice does not relate to Canadian securities and the clients are all “permitted clients” (institutional clients, corp with 25Mil and individuals with 5 mill.
REGISTRATION OF AN INDIVIDUAL AS A RR
- Person has to be registered, but no requirements that person has to be hired full-time
- If registrant engages in another occupation, that occupation must not bring the securities industry into disrepute.
- Provincial Acts permit reps to advertise that they are registered to sell securities, provided that the info is true and category of registration is specified. (Not allowed in Newfoundland and Labrador)
- IIROC Rule 39 – dealer members and persons conducting securities business on behalf (before only employed with IIROC dealer) of a dealer member are also permitted to enter into principal/agent business relationship business. “Securities related business” means any business or activity engaged in (direct or indirect) which constitutes trading or advising in securities or exchange contracts. “Employee” – person who has entered into an agency relationship with a market participant on established conditions by self-regulated entity of which the participant is a dealer member.
- Financial planning – is securities-related bus where any investment recommendations to a client are inextricably tied to the overall plan
- Dealer member are responsible for the supervision of financial planning activities of their agents and employees and related recordkeeping (DM can develop own rules and procedures)
- No protection for investor dealing with incorporated salespersons operating through their personal corporation.
PROFICIENCY REQUIREMENTS AND CATEGORIES OF INDIVIDUAL REGISTRATION
- Base Requirements (described under IA)
- Continuing Education (CE) – requirement for ongoing licensing in Canadian security industry. Applies only to individuals registered as trading with dealer member (no need for non-registered). Supervisor of RRs and IRs has to complete the Compliance portion of the program.
- CE requires completion of 1-2 courses equal at least 12 h of compliance and 30 h of professional development program. Courses must be completed within 3 years of each cycle.
- DM can develop own compliance and professional development courses. If CE is not completed at the end of 3rd year, penalties will apply.
- In 2005 IIROC launched online system to track CE requirements.
- To trade options and futures IR, RR must complete the necessary proficiency requirements.
INVESTMENT ADVISORS (registered person who can provide advice on the full range of equity and fixed income securities products, IA refers only to IIROC members, no one else)
Requirements:
- Formal training – CSC and CPH
- 90-day period of restricted client contact – CANNOT contact customer in order to obtain, take or solicit advises on orders. Must not receive commission splits as any part of their compensation. CAN gather info on clients, assist with inquiries, contact public and send introduction letters, forward non-securities specific info, create and research list of potential clients for future.
- 6 months period of supervision – close supervision, approval as IA. Required unless registrant has worked for at least 2 y in a registered capacity with a DM of IIROC or other SROs.
- 30 month Requirements – Wealth Management Essentials. (Rule 2900), required or approval suspended.
- CE (participating in industry’s CE.
Additional prof needed for options and futures. (Derivatives Fundamental and Options Licensing Course)
For success you need: Extensive industry knowledge; Strong Communication skills, Ethical decision making.
INVESTMENT REPRESENTATIVE (registered solely to take/submit client orders for execution, no advice)
Under NI 31-103 IR is a dealing rep.
Requirements:
- CSC and CPH
- 30 day training
- 6 month supervision
- No need for 30 month requirement
Candidate who is registered to sell MF can continue deal with existing client base, but he can only purchase and sell MF. During 30 or 90 day training cannot solicit or take on any new clients or transact in any non-mutual fund securities with anyone.
Person on 30 or 90 d training CANNOT:
- Provide recommendations, opinions or advice;
- Open clients acc;
- Complete KYC on behalf of IA;
- Distribute research reports under own name;
- Solicit, accept or process any orders, including unsolicited orders.
Two types of IRs:
MUTUAL FUND REPRESENTATIVE (solely for the purpose of advising on mutual funds and employees of financial institutions or mutual fund dealers)
Proficiency requirements:
- Formal Training Courses – pass any of the courses CSC, Canadian Investment Funds (CIF), Investment Fund in Canada (IFC), or met the requirements for a portfolio manager
- Training Program and Six Month Period of Supervision – within 90 days of the commencement of trading or dealing in securities on behalf of a dealer member, new salesperson should complete training program and 6 month supervision period.
Investment Dealers may employ mutual fund only registrants only if they meet full IA proficiency requirements within 9 months of being hired and complete training program within 18 month. Rep can continue act as full mutual fund rep, including taking new clients, till he begins 90 day training.
RESTRICTIONS OF UNREGISTERED STAFF
Non-registered personnel employed by a dealer member CANNOT:
- open client accounts
- distribute or receive order forms for transactions
- assist clients in completing forms for trans
- provide advice or recommendation
- complete KYC
- solicit transactions
CAN:
- advertize the services and products
- deliver or receive securities to or from clients
- contact clients to arrange appointments
- provide info on the status of acc, balance, quotes
- contact the public, invite to seminars
- receive completed NAAF
- distribute account opening applications
DUAL LICENSING FOR SECURITIES AND LIFE INSURANCE
Must meet the requirements of both Securities and Insurance Acts in their registration jurisdiction
Securities Acts require:
- insurance and securities business carried separately
- dual-licensee’s securities employer give written approval to the employee’s insurance license application
- Changes in status or disciplinary actions under Insurance Act reported to the Securities Administrator.
- Clients have to know that they deal with two separate business entities
Canadian Insurance Self-Regulatory Organization (CISRO) put recommendations on Life Insurance Agent education in Canada (standardize licensing education)
Licensing regime:
THE NATIONAL REGISTRATION DATABASE
IIROC REGISTRATION REVIEWS – THE FIT AND PROPER TEST FOR APPROVED PERSONS
JURISDICTIONAL REGISTRATION CONSIDERATION
Дата добавления: 2015-11-04; просмотров: 31 | Нарушение авторских прав
| <== предыдущая лекция | | | следующая лекция ==> |
| Chapter 3 – Research Design | | | Chapter 5 – Exploratory Research Design: |