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What is the Exempt Securities Market?
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The "exempt securities market" in Canada describes the portion of the capital markets for which certain exemptions are provided under provincial securities legislation from the full requirements of prospectus disclosure and certain retail client sales requirements. This section of the capital markets is also know as the Private Capital Market.  

Who are "Exempt Market Dealers"?

Exempt Market Dealers (EMDs) are fully registered securities dealers who engage in the business of trading in prospectus exempt securities, or any securities to qualified exempt market clients. EMDs may focus on certain market sectors (e.g. oil and gas, real estate, minerals, technology, etc.) or may have a broad cross sector business model. Clients of EMDs include companies, institutional investors, accredited investors (sophisticated or high net worth individuals who are eligible to trade securities in the exempt market), or eligible investors who are qualified to purchase exempt securities pursuant to an offering memorandum.

EMDs provide many valuable services to small, medium and large businesses, investment funds, merchant banks, financiers, entrepreneurs, and individual investors, through their ability to participate in the promotion, distribution and trading (i.e., buying and selling) of prospectus exempt securities, as either a principal or agent.

EMDs are subject to full dealer registration and compliance requirements and are directly regulated by the provincial securities commissions. EMDs are required to meet all dealer obligations which include: educational proficiency, capital and solvency, insurance, audited financial statements, know your client, know your product, trade suitability, compliance systems, record keeping, client statements, trade confirmations, disclosure of conflicts of interest and referral arrangements, etc. The EMD category of registration exists in all provinces and territories of Canada.

 

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