|How to become Exempt Market Dealer|
EMDs are exempt market securities dealers registered under provincial securities legislation in one or more jurisdictions in Canada. The regulatory framework for EMDs is set out in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations which applies in every jurisdiction across Canada.
EMDs may act in two primary capacities in the capital markets: 1) as a dealer or underwriter for any securities which are prospectus exempt, or 2) as a dealer for any securities, including investment funds which are prospectus qualified (mutual funds) or prospectus exempt (pooled funds), provided they are sold to clients who qualify for the purchase of exempt securities. The qualification criteria for exempt purchasers and exempt securities are found in National Instrument 45-106 Prospectus and Registration Exemptions.
Becoming Exempt Market Dealer
Becoming an EMD requires registration with one or more securities regulatory authorities across Canada pursuant to NI 31-103. A firm must be registered as an EMD and one of more individuals must register as the EMDs Chief Compliance Officer, Ultimate Designated Person and one or more Dealing Representatives.
Persons or firms interested in registering as an exempt market dealer can access the required forms below and should complete and submit them to their local securities regulatory authority. Please check our "industry and regulatory links" section for links to the websites of the securities regulatory authority in each province and territory.
A useful "Guide to Getting Registered" can be found on the OSC website.
In order for a firm to become registered as an exempt market dealer, an applicant firm will be required to submit the information required on Form 33-109F6 - Firm Registration.
In addition to the firm's registration as an exempt market dealer, each firm will be required to register one or more individuals as dealing representatives, a chief compliance officer, an ultimate designated person and may be required to file notice of permitted individuals. The registration applications for individuals are to be submitted using Form 33-109F4 - Individual Registration.
For details on these individual positions, the qualifications and proficiency requirements for each, and for information on the requirements for firms registering as an EMD, refer to National Instrument 31-103.
To locate registration forms and better understand which ones you need and when, see this section of the OSC website - OSC Guide to Registration Forms.
What makes EMDs different from other types of securities dealers?
The other categories of securities dealer, in addition to EMDs include:
Investment dealers may act as a dealer for any type of securities and any type of clients, including "retail" clients - investment dealers are required to be members of the self-regulatory organization, the Investment Industry Regulatory Organization of Canada (IIROC);
Mutual fund dealers are restricted to dealing in prospectus qualified mutual funds and are required to be members of the self-regulatory organization, the Mutual Funds Dealers Association of Canada (MFDA); and
Scholarship plan dealers which are restricted to trading only in scholarship plans and educational trusts;
Restricted dealers - are specialized dealers restricted to a particular product.
Why work with an EMD?
Legal Protection In Ontario, the Ontario Securities Commission registers dealers and prescribes compliance and regulatory standards for an EMD to conduct their securities dealer services with clients.
Peace of Mind
By ensuring your financial experts are registered as an EMD, you can trust they are appropriately regulated and managed by securities professionals who adhere to high standard of compliance and client service. EMDs are accountable for their compliance practices and acting in good faith and in the best interests of their clients.
ProficiencyEMDs pass a series of exams to ensure proficiency. In addition, compliance rules are in place to ensure that a strict code of conduct and proper client processes are followed to ensure fair and transparent service. Also, EMDs must file audited financial statements, and maintain minimum levels of capital and insurance.
Best Practices EnsuredThe conduct of the EMD is set by regulation and the EMD must earn a license. EMDs are subject to proficiency, capital and operational requirements. EMDs are required by law to have audited financial statements, a minimum of $50,000 working capital, and periodic statements to clients if there are transactions undertaken on their behalf, as well as insurance in place to cover a wide range of client issues.
The EMD offers a pool of sophisticated investors and minimizes many of the complicated and expensive requirements of the public equity markets. EMDs are experts in the purchase and sale of exempt market securities and often specialize in raising capital in particular industries: real estate, construction, mining, oil & gas, food technology, biotechnology, manufacturing, etc. EMDs are allowed to offer clients a far wider range of financial opportunities than a financial adviser doing M&A or sale of companies.
If there is an issue with the financial adviser, there is an independent dispute resolution option available. This ensures that any client complaints are resolved by independent industry experts focused on a win/win solution.
06/03/2016 » 09/03/2016
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