(September 22 – 12:30 ET) – The Ontario Securities Commission has published a final rule providing registration exemptions for non-resident advisors.
The rule was delivered to the Minister of Finance on September 13 and will come into force on November 27, unless it is rejected in the meantime.
Generally the OSC considers a person or firm offering advice to an Ontario resident to be acting as an advisor in the province, even if they are based outside of Ontario or the advice is unsolicited. This includes mutual funds that are sold in Ontario. The purpose of this rule is to provide an exemption from certain registration requirements for those advisors who accept certain conditions on their registration. These conditions are spelled out in the rule, including how advice is offered, to whom, and what must be disclosed.
Since its last publication for comment the rule has been amended to stipulate that an international advisor is restricted to acting as an advisor in Ontario for foreign securities, and can only act as an advisor in Ontario for Canadian securities if that activity is “incidental” to acting as an advisor for foreign securities. Whether the advice is “incidental” is to be evaluated from the point of view of the advisor, on an account by account basis, not the client.
The commission received just one comment in the second publication period, from Fidelity Investments Canada Ltd., expressing concern that an analogous approach has not yet been adopted for registration under the Commodity Futures Act. The OSC says it didn’t have rule making power under that act until December 1999. “The commission is now able to consider making a similar rule pursuant to the CFA, however, the commission does not want to delay implementing this rule.”
-IE Staff