• connecting its members across Canada for business and
Additional information about the PCMA is available on our
website at: www.pcmacanada.com
Who Are Exempt Market Dealers?
EMDs are fully registered dealers who engage in the business
of trading in securities to qualified exempt market clients. EMDs are
subject to full dealer registration and compliance requirements and
are directly regulated by the provincial securities commissions.
The regulatory framework for EMDs is set out in National
Instrument 31-103 Registration Requirements, Exemptions and
Ongoing Registrant Obligations (NI 31-103) and it applies in every
jurisdiction across Canada.
EMDs must satisfy substantially the same “Know-Your-Client”
(KYC), “Know- Your-Product” (KYP) and trade suitability obligations
as other registered dealers who are registered investment dealers
and members of the Investment Industry Regulatory Organization
of Canada and mutual fund dealers and members of the Mutual
Fund Dealers Association of Canada. NI 31-103 sets out a
comprehensive dealer regulatory framework (substantially the
same for all categories of dealer), which requires EMDs to satisfy
a number of regulatory obligations including:
• educational proficiency;
• capital and solvency standards;
• audited financial statements;
• KYC, KYP and trade suitability;
• compliance policies and procedures;
• books and records;
• trade confirmations and client statements;
• relationship disclosure, including disclosure of conflicts of
interest and referral arrangements;
• complaint handling;
• internal dispute resolution procedures, and external dispute
resolution for clients through the Ombudsman for Banking
Services and Investments;
• cost, product and account fees disclosure;
• maintenance of internal controls and supervision sufficient
to manage risks associated with its business;
• prudent business practices requirements;
• registration obligations; and
• submission to regulatory oversight and dealer compliance
EMDs may focus on certain market sectors (e.g., oil and gas,
real estate, mining or minerals, technology, venture financing, etc.)
or may have a broad cross-sector business model. EMD clients
may be companies, institutional investors, accredited investors or
investors who purchase exempt securities pursuant to an offering
memorandum or another available prospectus exemption.
EMDs provide many valuable services to small and medium
size enterprises, large businesses, investment funds, merchant
banks, financiers, entrepreneurs, and individual investors, through
their ability to participate in the promotion, distribution and trading
of securities, as either a principal or agent.
Comments and Analysis of the Proposed Amendments
Our answers to your Questions set out in the Proposed
Amendments are out below.
Unless otherwise defined herein, capitalized terms have
the same meaning ascribed thereto as set out in the Proposed
1. The information collected in the Proposed Report would
enhance our understanding of exempt market activity and, as a
result, facilitate more effective regulatory oversight of the exempt
market and inform our decisions about regulatory changes to the
exempt market. Do the reporting requirements of the Proposed
Report strike an appropriate balance between: (i) the benefits of
collecting this information, and (ii) the compliance burden that
may result for issuers and underwriters? If not, please explain.
Overall, we believe the Proposed Report strikes an appropriate
balance between: (i) the benefits of collecting this information,
and (ii) the compliance burden that may result for issuers and
underwriters, subject to our further comments set out below.
We believe a single report of trade across Canada is
appropriate, but strongly believe that the data cannot be for the
exclusive benefit of Canadian securities regulators. The industry,
academics, investors and others would strongly benefit from
immediate and meaningful access to the data with the ability to run
various reports based on the data to help make private markets
and transactional activity more transparent. There is a material
cost and administrative burden placed on issuers and sellers of
securities to compile the Proposed Report and we strongly believe
that a more immediate plan to readily provide such access to the
data/search functions should be a CSA priority. We understand
there are a number of private sector service providers that could
assist the CSA with such a project and it could be well positioned
as a private/public initiative.
2. Are there reasons why any of the information requested in the
Proposed Report should not be required? Is there any alternative
or additional information, including as requested in the March 2014
Proposals, that would better support compliance or policy analysis?
Below are our comments on certain information set out in the
Proposed Reports and our views.
(a) Item 4 – Issuer Information – (c) SEDAR profile number
We believe a note should be added in the companion policy that
non-reporting issuers that are making certain filings on SEDAR, would
not be required to complete items 4(d) – (h) if such a proposal becomes
law. See Proposed amendments to National Instrument 13-101 System
for Electronic Document Analysis and Retrieval (SEDAR) (NI 13-101)
and Multilateral Instrument 13-102 System Fees for SEDAR and NRD.