THE MANITOBA SECURITIES COMMISSION MSC RULE 2011-10 (Section 149.1, The Securities Act) AMENDING INSTRUMENT TO NATIONAL INSTRUMENT 31-103 1. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations is amended by this Instrument. 2. Section 1.1 is amended by (a) adding the following after the definition of "IIROC" "IIROC Provision" means a by-law, rule, regulation or policy of IIROC named in Appendix G, as amended from time to time; and (b) adding the following after the definition of "MFDA" "MFDA Provision" means a by-law, rule, regulation or policy of the MFDA named in Appendix H, as amended from time to time; 3. Section 3.16 is amended by (a) adding the following after subsection (1): 3.16(1.1) Subsection (1) only applies to a registered individual who is a dealing representative of a member of IIROC in respect of a requirement specified in any of paragraphs (1)(a) to (c) if the registered individual complies with the corresponding IIROC Provisions that are in effect. , and (b) adding the following after subsection (2): 3.16(2.1) Subsection (2) only applies to a registered individual who is a dealing representative of a member of the MFDA in respect of a requirement specified in paragraphs (2)(a) or (b) if the registered individual complies with the corresponding MFDA Provisions that are in effect. 4. Section 9.3 is amended by (a) adding the following after subsection (1): 9.3(1.1) Subsection (1) only applies to a registered firm in respect of a requirement specified in any of paragraphs (1)(a) to (q) if the registered firm complies with the corresponding IIROC Provisions that are in effect. , and (b) adding the following after subsection (2): 9.3(2.1) Subsection (2) only applies to a registered firm in respect of a requirement specified in any of paragraphs (2)(a) to (m) if the registered firm complies with the corresponding IIROC Provisions that are in effect.
- 2 - 5. Section 9.4 is amended by (a) adding the following after subsection (1): 9.4(1.1) Subsection (1) only applies to a registered firm in respect of a requirement specified in any of paragraphs (1)(a) to (q) if the registered firm complies with the corresponding MFDA Provisions that are in effect. , and (b) adding the following after subsection (2): 9.4(2.1) Subsection (2) only applies to a registered firm in respect of a requirement specified in any of paragraphs (2)(a) to (k) if the registered firm complies with the corresponding MFDA Provisions that are in effect. 6. The Instrument is amended by adding the following appendices after Appendix F: APPENDIX G - EXEMPTIONS FROM CERTAIN REQUIREMENTS FOR IIROC MEMBERS (Section 9.3 [exemptions from certain requirements for IIROC members]) NI 31-103 Provision IIROC Provision section 12.1 [capital requirements] 1. Dealer Member Rule 17.1; and 2. Form 1 Joint Regulatory Financial Questionnaire and Report - Part I, Statement B, “Notes and Instructions” section 12.2 [notifying the 1. Dealer Member Rule 5.2; and regulator of a subordination 2. Dealer Member Rule 5.2A agreement] section 12.3 [insurance – dealer] 1. Dealer Member Rule 400.2 [Financial Institution Bond]; 2. Dealer Member Rule 400.4 [Amounts Required]; and 3. Dealer Member Rule 400.5 [Provisos with respect to Dealer Member Rules 400.2, 400.3 and 400.4] section 12.6 [global bonding or 1. Dealer Member Rule 400.7 [Global Financial Institution insurance] Bonds] section 12.7 [notifying the 1. Dealer Member Rule 17.6; regulator of a change, claim or 2. Dealer Member Rule 400.3 [Notice of Termination]; and cancellation] 3. Dealer Member Rule 400.3B [Termination or Cancellation] section 12.10 [annual financial 1. Dealer Member Rule 16.2 [Dealer Member Filing statements] Requirements]; and 2. Form 1 Joint Regulatory Financial Questionnaire and Report section 12.11 [interim financial 1. Dealer Member Rule 16.2 [Dealer Member Filing information] Requirements]; and 2. Form 1 Joint Regulatory Financial Questionnaire and Report section 12.12 [delivering financial 1. Dealer Member Rule 16.2 [Dealer Member Filing information – dealer] Requirements] subsection 13.2(3) [know your 1. Dealer Member Rule 1300.1(a)-(n) [Identity and client] Creditworthiness]; 2. Dealer Member Rule 1300.2; 3. Dealer Member Rule 2500, Section II [Opening New Accounts]; and 4. Form 2 New Client Application Form
- 3 - NI 31-103 Provision IIROC Provision section 13.3 [suitability] 1. Dealer Member Rule 1300.1(o) [Business Conduct]; 2. Dealer Member Rule 1300.1(p) [Suitability Generally]; 3. Dealer Member Rule 1300.1(q) [Suitability Determination Required When Recommendation Provided]; 4. Dealer Member Rule 1300.1(r) and Dealer Member Rule 1300.1(s) [Suitability Determination Not Required]; 5. Dealer Member Rule 1300.1(t) [Corporation Approval]; 6. Dealer Member Rule 2700, Section I [Customer Suitability]; and 7. Dealer Member Rule 3200 [Minimum Requirements for Dealer Members Seeking Approval Under Rule 1300.1(t) for Suitability Relief for Trades not Recommended by the Member] section 13.12 [restriction on 1. Dealer Member Rule 100 [Margin Requirements] lending to clients] section 13.13 [disclosure when 1. Dealer Member Rule 29.26 recommending the use of borrowed money] section 13.15 [handling 1. Dealer Member Rule 2500B [Client Complaint Handling]; complaints] and 2. Dealer Member Rule 2500, Section VIII [Client Complaints] subsection 14.2(2) [relationship 1. Dealer Member Rules of IIROC that set out the requirements disclosure information] for relationship disclosure information similar to those contained in IIROC's Client Relationship Model proposal, published for comment on January 7, 2011; IIROC has not yet assigned a number to the relationship disclosure dealer member rule in its Client Relationship Model proposal. We will refer to the dealer member rule number when IIROC has assigned one. 2. Dealer Member Rule 29.8; 3. Dealer Member Rule 200.1(c); 4. Dealer Member Rule 200.1(h); 5. Dealer Member Rule 1300.1(p) [Suitability Generally]; 6. Dealer Member Rule 1300.1(q) [Suitability Determination Required When Recommendation Provided]; 7. Dealer Member Rule 1300.2; and 8. Dealer Member Rule 2500B, Part 4 [Complaint procedures / standards] section 14.6 [holding client assets 1. Dealer Member Rule 17.3 in trust] section 14.8 [securities subject to a 1. Dealer Member Rule 17.2A safekeeping agreement] 2. Dealer Member Rule 2600 – Internal Control Policy Statement 5 [Safekeeping of Clients' Securities] section 14.9 [securities not subject 1. Dealer Member Rule 17.3; to a safekeeping agreement] 2. Dealer Member Rule 17.3A; and 3. Dealer Member Rule 200.1(c) section 14.12 [content and delivery 1. Dealer Member Rule 200.1(h) of trade confirmation]
- 4 - APPENDIX H - EXEMPTIONS FROM CERTAIN REQUIREMENTS FOR MFDA MEMBERS (Section 9.4 [exemptions from certain requirements for MFDA members]) NI 31-103 Provision MFDA Provision section 12.1 [capital requirements] 1. Rule 3.1.1 [Minimum Levels]; 2. Rule 3.1.2 [Notice]; 3. Rule 3.2.2 [Member Capital ; 4. Form 1 MFDA Financial Questionnaire and Report; and 5. Policy No. 4 [Internal Control Policy Statements – Policy Statement 2: Capital Adequacy] section 12.2 [notifying the 1. Form 1 MFDA Financial Questionnaire and Report, regulator of a subordination Statement F [Statement of Changes in Subordinated Loans]; agreement] and 2. Membership Application Package – Schedule I (Subordinated Loan Agreement) section 12.3 [insurance – dealer] 1. Rule 4.1 [Financial Institution Bond]; 2. Rule 4.4 [Amounts Required]; 3. Rule 4.5 [Provisos]; and 4. Policy No. 4 [Internal Control Policy Statements – Policy Statement 3: Insurance] section 12.6 [global bonding or 1. Rule 4.7 [Global Financial Institution Bonds] insurance] section 12.7 [notifying the 1. Rule 4.2 [Notice of Termination]; and regulator of a change, claim or 2. Rule 4.3 [Termination or Cancellation] cancellation] section 12.10 [annual financial 1. Rule 3.5.1 [Monthly and Annual]; statements] 2. Rule 3.5.2 [Combined Financial Statements]; and 3. Form 1 MFDA Financial Questionnaire and Report section 12.11 [interim financial 1. Rule 3.5.1 [Monthly and Annual]; information] 2. Rule 3.5.2 [Combined Financial Statements]; and 3. Form 1 MFDA Financial Questionnaire and Report section 12.12 [delivering financial 1. Rule 3.5.1 [Monthly and Annual] information – dealer] section 13.3 [suitability] 1. Rule 2.2.1 [“Know-Your-Client”]; and 2. Policy No. 2 [Minimum Standards for Account Supervision] section 13.12 [restriction on 1. Rule 3.2.1 [Client Lending and Margin]; and lending to clients] 2. Rule 3.2.3 [Advancing Mutual Fund Redemption Proceeds] section 13.13 [disclosure when 1. Rule 2.6 [Borrowing for Securities Purchases] recommending the use of borrowed money] section 13.15 [handling 1. Rule 2.11 [Complaints] complaints] 2. Policy No. 3 [Complaint Handling, Supervisory Investigations and Internal Discipline]; and 3. Policy No. 6 [Information Reporting Requirements] subsection 14.2(2) [relationship 1. Rule 2.2.5 [Relationship Disclosure] disclosure information] section 14.6 [holding client assets 1. Rule 3.3.1 [General]; in trust] 2. Rule 3.3.2 [Cash]; and 3. Policy No. 4 [Internal Control Policy Statements – Policy Statement 4: Cash and Securities, and Policy Statement 5: Segregation of Clients’ Securities]
- 5 - NI 31-103 Provision MFDA Provision section 14.8 [securities subject to a 1. Rule 3.3.3 [Securities]; and safekeeping agreement] 2. Policy No. 4 [Internal Control Policy Statements – Policy Statement 4: Cash and Securities, and Policy Statement 5: Segregation of Clients’ Securities] section 14.9 [securities not subject 1. Rule 3.3.3 [Securities] to a safekeeping agreement] section 14.12 [content and delivery 1. Rule 5.4.1 [Delivery of Confirmations]; of trade confirmation] 2. Rule 5.4.2 [Automatic Payment Plans]; and 3. Rule 5.4.3 [Content] 7. This Instrument comes into force on February 28, 2012. 8. This Instrument may be cited as MSC Rule 2011-10.
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