|The Private Capital Markets in Canada|
The public and private capital markets in Canada are regulated by the securities commissions / regulatory authorities in each province and territory through securities legislation, regulations, rules and national or multilateral instruments. Securities regulators are responsible for the administration and enforcement of securities laws including the regulation of securities as products and regulation of securities dealers and advisers as market participants.
Working together as the Canadian Securities Administrators (the CSA) provincial/territorial regulators have developed harmonized multilateral or national rules for the securities industry. Key areas where national rules have been enacted include: 1) disclosure and conduct of public companies, 2) distribution of securities, 3) the operation of securities exchange marketplaces, and 4) registration and compliance obligations of dealers and advisers in the capital markets.
The National Registration and Compliance Regime
Unlike the predecessor category of Limited Market Dealer (in Ontario and NFLD only), the new EMD category is a comprehensive registration category where firms must comply with the full regulatory requirements of securities dealer regulation, including:
EMDs must follow the same "Know Your Client" and "Know Your Product" procedures and carry the same "Suitability" obligations as other registered dealers (e.g. investment dealers, mutual fund dealers and scholarship plan dealers). These requirements ensure that each client's personal, financial and investment profile is understood and confirmed prior to any trading activity. EMDs must also ensure that any security they recommend is suitable for a particular client by considering the particular investment product as well as each individual client's investment goals and profile.