From the Regulators

Proposals include stronger protection for client assets, clarity for EMD activities and relief from certain CRM2 requirements

By IE Staff |

The Canadian Securities Administrators (CSA) on Thursday published for comment proposals that would enhance custody requirements and clarify activities that may be conducted by exempt market dealers (EMDs).

The proposals contain amendments to National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) and National Instrument 33-109 Registration Information.

The proposed amendments "are intended to address potential intermediary risks, enhance the protection of client assets and codify existing custodial best practices," the CSA says in a statement.

The amendments also include proposals to incorporate relief from certain client relationship model, phase 2 (CRM2), requirements.

"Safety of client assets is a fundamental element of the CSA's investor protection mandate. The proposed amendments aim to promote stronger investor protection, clarify certain regulatory requirements and enhance market efficiencies," adds Louis Morisset, chairman of the CSA and president and CEO of the Autorité des marchés financiers.

The proposals contain amendments to:

> clarify the activities that may be conducted under the EMD category of registration in respect of trades in prospectus-qualified securities;

> expand an existing exemption from the dealer registration requirement so that registered advisors may trade in the securities of investment funds if the adviser or an affiliate manages the investment fund and certain conditions are met;

> make permanent CRM2 relief that was granted on a temporary basis in May 2015; and

> update guidance regarding the delivery of information required under CRM2 to address matters that have arisen in the course of its implementation.

The proposed amendments can be found on CSA members' websites. The comment period closes Oct. 5.

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