By James Langton
(April 17 – 13:10 ET) – The Ontario Securities Commission has republished the rule requiring all dealers to become members of a self-regulatory organization. It expects the rule to take effect on December 1, 2000.
At this point, the Investment Dealers Association is the only recognized SRO for securities dealers. The Mutual Fund Dealers Association is pursuing SRO status for fund dealers, too. Originally the MFDA was expecting to receive recognition by July 1, 2000, but the OSC rule says, “It is contemplated that the Commission will consider recognition of the MFDA as a SRO in late 2000 or early 2001.”
“Registrants should begin to plan for the transition under this rule immediately. Registrants should be aware that the processing of membership applications at the IDA requires adequate review and may take some time,” says the OSC.
The last draft of the rule received one comment, from a day trading firm, noting that it doesn’t fit under the definition of a traditional dealer and should not be subject to this rule. The OSC rejects this argument, although it allows that firms can apply for individual exemptions.
Assuming that the rule does take effect December 1, new applicants would be required to join an SRO by March 1, 2001, and existing securities dealers must become a member by their first registration renewal after March 1 — so no later than March 1, 2002.
In the rule’s initial form firms would have had to apply before filing their financials with the commission. The OSC has changed this to the re-registration date. Existing dealers must also inform the SRO with notice of its intention to apply by January 1, 2001.
Comments on the latest draft of the rule are due by May 14.