Canadian securities regulators say that dealers can distribute research reports prepared by firms regulated by the UK Financial Services Authority (FSA), as long as they disclose a key difference between Canadian and British rules.

The Investment Industry Regulatory Organization of Canada (IIROC) has issued a notice indicating that IIROC has approved the FSA, allowing firms to distribute reports prepared under FSA authority. However, dealers disseminating research prepared under FSA requirements must also disclose the difference in ownership threshold requirements between the British and Canadian rules.

Under IIROC rules, research reports must disclose whether the dealer and its affiliates collectively own 1%, or more of any class of the issuer’s equity securities. Firms regulated by the FSA must disclose shareholdings exceeding 5% of the total share capital in the relevant issuer.

IIROC indicates that dealers distributing research reports issued by a firm regulated by the FSA must disclose that difference in ownership threshold requirements. As well, dealers must indicate that the research report was not prepared in compliance with Canadian disclosure requirements.