The Canadian Securities Administrators has published a staff notice providing guidelines for the use of mobility exemptions under the principal regulator system.

The mobility exemptions allow a dealer, an unrestricted adviser, a group savings plan firm or individual representatives to continue dealing with a client that moves to a different jurisdiction and with family members of that client without registering in that other jurisdiction. The mobility exemptions came into effect everywhere but Ontario on September 19, 2005.

Relocation of a client to another jurisdiction triggers the availability of the mobility exemptions, the CSA says. To rely on the mobility exemptions, a registrant must be registered in its principal jurisdiction, have no more than 10 clients in each of the other jurisdictions in the case of a dealer or adviser, or no more than five clients in each of the other jurisdictions in the case of an individual representative, and have assets under management in each of the other jurisdictions of not more than $10 million in the case of a firm or not more than $5 million in the case of an individual.

The notice points out that the rule imposes additional conditions, including an obligation to provide specified disclosure to eligible clients in each of the other jurisdictions before relying on a mobility exemption. Before relying on a mobility exemption, a dealer, adviser or rep must also notify the regulator in the non-principal jurisdiction that it intends to rely on a specified mobility exemption.

Dealers and advisers must supervise the activities of each of their representatives, it notes. This includes representatives who provide trading or advising services to clients under a mobility exemption. So, they must have appropriate policies and procedures for supervision of representatives relying on any of the mobility exemptions. In addition, dealers and advisers must ensure they and their representatives are entitled to rely on the mobility exemptions, and they must keep the records necessary to demonstrate that they do.