Written by James D. Beeby and Lisa Andrews
On August 15, 2018, the securities regulatory authorities (together, the "Commissions") of British Columbia, Manitoba, Nunavut, the Northwest Territories and the Yukon (the "Jurisdictions") announced that effective April 30, 2019, the local orders comprising the registration exemption commonly known as the "Northwest Exemption" will be revoked. The Alberta Securities Commission announced that it would be seeking consultations on revoking its local order comprising the Northwest Exemption and the Financial and Consumer Affairs Authority of Saskatchewan announced that it will advise of its approach to the Northwest Exemption in due course.
The Northwest Exemption exempts firms and individuals engaged in the business of trading in securities distributed under an exemption from the prospectus requirements ("exempt market securities") from being registered as an "exempt market dealer" for firms, or a "dealing representative" for individuals, under National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations ("NI 31-103") provided certain conditions were met by the firm and/or individual.
As a consequence of the revocation of the Northwest Exemption, firms and individuals who are in the business of trading in exempt market securities in the Jurisdictions will be required to be registered as an exempt market dealer or dealing representative under NI 31-103. The Commissions have advised that the Northwest Exemption will remain in effect until April 30, 2019, to permit those presently relying on the Northwest Exemption to complete an orderly wind up or seek registration under NI 31-103.
The Commissions have also implemented transition provisions allowing a firm or individual currently relying on the Northwest Exemption to continue to rely on the Northwest Exemption after April 30, 2019, provided:
- the proper securities regulatory authority has received a substantially complete Form 33-109F6 Firm Registration and applicable fees prior to April 30, 2019; and
- the firm or individual is then in, and stays in, compliance with the Northwest Exemption.
The transition relief will continue in effect until such time as the registration application has been accepted or rejected.
The Commissions will also consider interim relief on a case-by-case basis for those individuals not able to meet the proficiency requirements for registration under NI 31-103.
Further, the British Columbia Securities Commission has advised that effective February 15, 2019, it is revoking BC Instrument 32-517 Exemption from Dealer Registration Requirement for Trades in Securities of Mortgage Investment Entities ("BC 32-517"). As a result, firms or individuals who currently are in the business of trading in securities of "mortgage investment entities" will be required to be registered under NI 31-103 as an exempt market dealer or dealing representative on or before February 15, 2019.
The Commissions have advised that they expect that the volume of registration applications will be significant and therefore we recommend that if you think that you may be in the business of trading in exempt market securities or securities of mortgage investment entities and have been relying on the Northwest Exemption or BCI 32-517, you seek legal advice as soon as possible.