IN THE MATTER OF THE SECURITIES LEGISLATION OF BRITISH COLUMBIA,
ALBERTA, SASKATCHEWAN, MANITOBA, QUEBEC, ONTARIO, NEW BRUNSWICK, NOVA SCOTIA, NEWFOUNDLAND
AND LABRADOR, YUKON TERRITORY, NORTHWEST TERRITORIES, AND NUNAVUT
AND
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
AND
IN THE MATTER OF RBC DOMINION SECURITIES INC.,
RBC GLOBAL INVESTMENT MANAGEMENT INC. AND
RBC PARAMETERS PORTFOLIOS PROGRAM
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory
authority
or regulator (the "Decision Maker"), in each of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Newfoundland and
Labrador, the Yukon Territory, Northwest Territories and Nunavut (collectively, the
"Jurisdictions") has received an application (the "Application") from
RBC Dominion Securities Inc. ("RDC DS") for a decision under the securities
legislation (the "Legislation") of each Jurisdiction that the provisions (the
"Trade Confirmation Requirement") contained in the Legislation that require a
registered dealer, who has acted as principal or agent in connection with a trade in a
security, to promptly send or deliver to the customer a written confirmation (a
"Trade Confirmation") of the transaction, setting forth certain information
specified in the Legislation, shall not apply to RBC DS in respect of trades (a
"Managed Account Trade") where the customer (a "Customer") has a
Managed Account (as defined below) with RBC DS under a portfolio management program (the
"Program") operated by RBC DS and known as the "RBC Parameters Portfolio
Program" and the trade is made for the Managed Account;
AND WHEREAS pursuant to the Mutual Reliance Review
System for Exemptive Relief Applications (the "System"), the Ontario
Securities
Commission is the principal regulator for this application;
AND WHEREAS RBC DS has represented to the Decision
Makers that:
1. RBC DS is a corporation incorporated under the laws of Canada and has
its head office in Toronto, Ontario.
2. RBC DS is registered under the legislation of each Jurisdiction as a
dealer in the category of "investment dealer" (or the equivalent),
and is
authorized to act as an adviser, pursuant to an exemption from the "adviser
registration requirement" (as defined in National Instrument 14-101
Definitions) that is made available under the Legislation of each Jurisdiction
to dealers
who are members of the Investment Dealers Association of Canada (the "IDA").
3. RBC DS provides both discretionary managed and non-discretionary
advisory services to individuals, corporations and other entities seeking wealth
management or related services.
4. RBC DS intends to offer the Program through its network of branches
across Canada. Under the Program, RBC DS will act as portfolio manager for Customers
who
desire certain discretionary managed services ("Managed Services")
from RBC DS
through an investment portfolio account ("a Managed Account") under
which RBC
DS, pursuant to a written agreement ("Customer Agreement") made between
RBC DS and the Customer, makes investment decisions for the account and has full
discretionary
authority to trade in securities for the account without obtaining the specific
consent of
the Customer to the trade.
5. The Program is subject to Investment Dealers Association Regulation
1300 "Supervision of Accounts" and, in each Jurisdiction, all adviser
activities in respect of the Managed Account will be provided by employees of
RBC DS who meet the
proficiency requirements of a portfolio manager or associate portfolio manager
under the
Legislation of the Jurisdiction.
6. For each Customer, the Managed Services will be described in the
Customer Agreement and will include the following services (the "Wrap Services")
for which the Customer will pay to RBC DS a fixed percentage "wrap" fee
(the
"Wrap Fee"): investment research, portfolio selection and management
with respect to all securities or other assets in the Managed Account, custody,
reporting, and
trade execution. The Wrap Fee will be calculated on the basis of assets under
administration in the Managed Account and will not depend upon the number of
transactions effected on behalf the Managed Account (i.e., no trading commission
will be charged to the
Managed Account).
7. Each Managed Account will hold a portfolio (the "Managed Account
Portfolio") that will typically consist of a basket of securities (the "RBC
Parameters Portfolio") that will, from time to time, be selected by RBC
DS using one or more Guided Portfolio Lists prepared for internal use by RBC
DS. Each Managed Account
Portfolio will be determined on the basis of an RBC Parameters Portfolio, unless
the Customer has instructed RBC DS to exclude from their Managed Account securities
of a
specific industry classification or other specific securities, or, RBC DS otherwise
determines, in its discretion, that the content of the Managed Account Portfolio
should
differ from that suggested by the corresponding RBC Parameters Portfolio.
8. Under the Program:
(a) RBC DS will identify the investment objective and risk tolerance for each Customer and determine the appropriate RBC Parameters Portfolio to be used by RBC DS in connection with its selection of securities or other assets to comprise the Managed Account Portfolio of the Customer;
(b) RBC DS will be authorized by the Customer in the Customer Agreement to retain RBC Global Investment Management Inc. (as "RBC GIM") to determine which securities will be held in a particular RBC Parameters Portfolio and to act as the agent for RBC DS in respect of the Managed Account by performing investment research, security selection and portfolio management functions in respect of all securities or other assets in the Managed Account; and
(c) the Customer will have no contractual relationship with RBC GIM, but
(d) RBC DS will be responsible to the Customer for all activities of RBC GIM in respect of the Managed Account of the Customer.
9. Except for Nunavut where it is pursuing such registration,
RBC GIM is registered under the Legislation of each Jurisdiction as an adviser
in the category of "investment counsel" and "portfolio manager" (or
the equivalent).
10. Under the Program, RBC DS will send to the Customer of each Managed
Account:
(a)not less than once every three months, a performance report for the Managed Account; and
(b) not less than once a month, a statement of account (a "Statement of Account") for the Managed Account which identifies the assets of the Customer being managed on behalf of the Customer through the Managed Account, and includes, for each Managed Account Trade made during the period, the information which RBC DS would otherwise have been required to include in a written confirmation of the Managed Account Trade that was sent or delivered in accordance with the Trade Confirmation Requirement, except for the following information (which will be maintained by RBC DS in its books and records and made available to the Customer upon request):(i) where RBC DS acted as agent, the name of the person or company from, to or through whom the security was bought or sold;
(ii) the date name of the stock exchange, if any, upon which the transaction took place; and
(iii) the name of the salesperson, if any, in the transaction.
11. Customers paying a fixed percentage fee for a discretionary managed service, such as the Program, have advised RBC DS that they would prefer not to receive Trade Confirmations for Managed Account Trades.
12. There will be no impact on fees or expenses to be paid by a Customer resulting from the Customer instructing RBC DS that the Customer does not wish to receive Trade Confirmations for Managed Account Trades.
AND WHEREAS pursuant to the System, this MRRS Decision Document evidences the decision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met;
THE DECISION of the Decision Makers pursuant to the Legislation is that RBC DS shall not be subject to the Trade Confirmation Requirement for any Managed Account Trade, provided that:
(A) the Customer has previously informed RBC DS that the Customer does not wish to receive Trade Confirmations for Managed Account Trades; and(B) in the case of each such Managed Account Trade, RBC DS sends to the Customer the corresponding Statement of Account, that includes the information for the Managed Account Trade, referred to in paragraph 10(b), above.
DATED at Toronto this 21st day of May, 2003
Harold P. Hands | Robert W. Korthals |
Headnote
Mutual Reliance Review System for Exemptive Relief Applications Relief
from requirement to send trade confirmations to clients of a portfolio management
program where
client has given applicant full discretionary authority
Applicable British Columbia Provisions
Securities Act, R.S.B.C. 1996, c. 418, ss. 36(3) and 48
Securities Rules, B.C. Reg. 194/97, s. 80(1)