OrionConsulting.services
Toronto, Canada
Securities Compliance Consulting
EXEMPT MARKET DEALER
Fast track to registration
A company that wants to offer its securities to the public in Ontario must prepare a detailed disclosure document known as a prospectus as required by subsection 56(1) of the Securities Act (Ontario).
However, there are some exceptions that allow securities to be offered without a prospectus, called prospectus exemptions, which can help a company raise money without the time and expense of preparing a prospectus.
Investors who buy securities through prospectus exemptions generally do not have the benefit of ongoing and detailed disclosure about the security that they are buying or its issuer. These "exempt market" securities may also not be as liquid as securities in the public market when investors wish to dispose of them.
Firms that trade exempt market securities with the public in Ontario are required to register as Exempt Market Dealer (EMD) with the principal regulator. Individuals who carry on activity requiring registration on behalf of an Exempt Market Dealer are the Ultimate Designated Person, Chief Compliance Officer and Dealing Representatives.
EMD REGISTRATION CHECKLIST
Summary of requirements
A firm that trades securities in the exempt market is not exempt, except where provided, from the registration requirement under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Also known as Exempt Market Dealer, it may act as a dealer or underwriter when it trades in, or distributes, a security that is distributed under an exemption from the prospectus requirement, provided the purchaser of the exempt security meets the qualification criteria for exempt purchasers and exempt securities in National Instrument 45-106 Prospectus Exemptions.
Individuals seeking registration as Ultimate Designated Person, Chief Compliance Officer and Dealing Representative must be deemed fit for registration, meeting the requirements of proficiency, integrity and solvency.
Our services include guiding your firm and individuals through each stage of your application, such as:
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National Registration Database (NRD) enrollment;
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Form 33-109 F6 Firm Registration;
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Form 33-109 F4 Individual Registration;
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System of books and records;
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Business plan;
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Policies and procedures manual;
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Organizational and ownership charts;
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Calculation of excess working capital;
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Relationship disclosure, conflict of interest disclosure, risk disclosures, etc;
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Audited financial statements;
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Business continuity plan; and
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Other supporting documents.
CSA STAFF NOTICE 31-358
CSA Staff Notice 31-358 Guidance on Registration Requirements for Chief Compliance Officers and Request for Comments
In CSA Staff Notice 31-358, the Canadian Securities Administrators (CSA) announced guidance that will reduce regulatory burden on small and medium sized firms by allowing them to implement more flexible chief compliance officer (CCO) arrangements that better align with their operational needs and business models. The guidance outlines three CCO models tailored to the needs of small businesses, specialized businesses, and firms with multiple lines of business.
To enhance competitiveness for registrants and better serve investors by making it easier for registrants to fulfill their CCO responsibilities in a manner that aligns with their operational needs and business models while continuing to meet their obligations under NI 31-103, the CSA has requested and received comments from the public and registrants on how to operationalize the proposed arrangements of:
• Shared CCO Model;
• Multiple CCO Model; and
• Specialized CCO Model
With generally favorable comments from market participants towards this initiative, it is expected that the CSA will follow through with its commitment to reduce regulatory burden after consultation with staff of the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) in the development of this notice.
SHARED CCO SERVICES
A cost efficient and effective compliance system
OrionConsulting.services is uniquely positioned and will be ready, once the Shared CCO Model is adopted by the CSA, to offer “Shared CCO” services to firms with individuals who meet CCO registration requirements where the Shared CCO Model is appropriate for their business.
We will assist your firm with its application to register a Shared CCO and demonstrate to regulators how your firm, under the Shared CCO Model, will comply with its obligation under section 11.1 of NI 31-103 to maintain an effective compliance system, by adequately addressing capacity, client confidentiality, conflicts of interest, and investor protection concerns.