Before you begin selling securities to the public you must be registered with the appropriate provincial securities regulatory authority. MFDA rules and by-laws, and provincial and territorial securities legislation require registration in jurisdictions where your clients are located. This applies regardless of where your client was located when the account was opened, and whether or not there is trading in the account.
Process of Registration
|Step||Who does it||Description|
|1||Dealing Representative||Meet the proficiency requirements. To be registered as a dealing representative, you must pass a recognized certification course such as the Canadian Investment Funds Course.|
|2||Dealing Representative||Obtain employment with a mutual fund dealer. Before or after passing the certification exam, you need to obtain employment with a mutual fund dealer who is a member of the MFDA.|
|3||Dealing Representative||Contact the mutual fund dealer’s Compliance Officer to register with the province.|
|4||Mutual Fund Dealer||Submit the dealing representative’s registration to the National Registration Database. In the context of mutual funds, firms are registered as mutual fund dealers. Mutual fund dealers then sponsor individuals who become registered as dealing representatives. You cannot be registered without a sponsoring mutual fund dealer firm. Firms and individuals who become registered are known as registrants. Your employer will send your application for registration through the National Registration Database (NRD). Depending upon business needs, your mutual fund dealer will submit applications to register you in one or more provinces. You must also complete the RCMP Records Request/Reply form, which authorizes the RCMP to investigate and determine if you have a criminal record.|
|5||Provincial or Territorial Securities Commission||Grant your registration, if you have met applicable requirements and there are no objections to registration on other grounds. You may not begin to sell securities until you have received formal confirmation from the securities regulatory authority that your application for registration has been approved and registration granted. Objections may stem from unacceptable past employment history in the securities industry, or from a criminal record in which the crime involved integrity or conduct.|
|Note: The MFDA also requires that you complete a training program within 90 days of your registration. This is concurrent with a six-month supervisory period.|
National Registration Database (NRD)
The National Registration Database (NRD) is a web-based system containing registration information for mutual fund dealers, advisors, and individuals registered under securities legislation in the provinces and territories. NRD allows the electronic filing of applications, notices, and other regulatory information. The use of NRD is mandatory for filings in all jurisdictions. Under the NRD only one application needs to be filed for registration in multiple jurisdictions.
Through the NRD system, firms can review the application status of all of their employees online.
Electronic filings of registration forms are made by an authorized firm representative (AFR), an individual authorized by your mutual fund dealer to submit information to NRD on behalf of the firm and its sponsored individuals. The AFR will review your application and file it on the NRD.
The Passport System
The Passport System is an initiative adopted by the securities commissions in all jurisdictions except Ontario to streamline the processes for making regulatory decisions.
Under the Passport System, in most cases, applications for registration in multiple jurisdictions need to be made with only one regulator, known as the principal regulator. In the case of a registration application for a dealing representative, the principal regulator is generally the regulator in the jurisdiction in which the individual has his or her working office. The working office is the office of the sponsoring firm where the individual does most of his or her business. In the case of the firm, it is generally the regulator in the jurisdiction where the firm has its head office.
Renewal, Suspension, Re-activation
No Renewal Requirement
There is no registration renewal requirement for any province. Registration remains effective until it is suspended or terminated, although annual fees continue to be payable for your registration by your mutual fund dealer.
Suspension of Registration
If you cease to have a working relationship with a registered firm, your registration is suspended. Your mutual fund dealer must notify the appropriate securities commissions of the termination of the relationship.
If your registration is suspended, you may no longer carry out the activity for which you were registered. However, you remain a registrant and continue to be subject to the jurisdiction of the securities regulators.
If you join another sponsoring firm more than 90 days after leaving your previous firm, the automatic transfer will not apply. Instead, the new sponsoring firm will need to file an application for the reinstatement of your registration. This process is known as reactivation and requires updating the individual information on the appropriate form.
You are not allowed to conduct any activity requiring registration until your registration has been reinstated and you receive confirmation of this from the securities regulatory authority.
Be sure to consult your firm’s compliance officer when planning any changes of employment.
Reporting Material Changes
You must inform the securities regulatory authority of any material or significant change in your personal circumstances. The deadline depends on the type of information that has changed.
These changes include:
- Name change resulting from a marriage or divorce
- Declaration of personal bankruptcy
- Change of address
You should submit changes using NRD. Your compliance officer can provide you with more details.
Client Mobility Exemption
As a general rule, you and your mutual fund dealer must register in every jurisdiction where you and your mutual fund dealer want to operate. For instance, if you are an Ottawa-based dealing representative who has clients in Ottawa and Montreal, you need to be registered in both Ontario and Québec.
However, a provision exists for a limited exemption, called the client mobility exemption, which allows you to continue servicing an existing client who moves to a new jurisdiction, even if you are not registered there.
The following conditions must be met in order for the client mobility exemption to apply:
- Your mutual fund dealer is registered in the new jurisdiction, known as the local jurisdiction.
- You have no more than five clients in the local jurisdiction.
Before you act for a client in the local jurisdiction, you must disclose to your client that you are exempt from registration in the local jurisdiction and are not subject to requirements otherwise applicable under local securities legislation. Your dealer may also have client mobility policies and procedures that you will be expected to abide by.
It is to be remembered that the exemption is only available for your existing clients and not for acquiring new clients.
Tony has been handling Erica’s portfolio for the last five years. Erica has been residing in Ontario during the period. After her recent marriage, she moved to New Brunswick. Erica wants Tony to continue handling her account and wants Tony to handle her husband Robert’s portfolio as well.
Tony can use the client mobility exemption and continue handling Erica’s portfolio, assuming he has not yet reached the maximum of five clients in that local jurisdiction, and that he has checked with his compliance department.
Tony cannot take over Robert’s portfolio as the Client Mobility Exemption is available only for existing clients and not for acquiring and handling new business. In order to take on Robert as a client, Tony must become registered in New Brunswick.
Products You Can Sell
Under securities legislation, every firm and individual must be registered if they are in the business of trading or advising in securities.
Depending on the products that you intend to sell, registration in more than one category may be necessary. For example, a dealing representative who wants to sell mutual funds and limited partnerships will have to register as a dealing representative in mutual funds and exempt markets. This is only possible if the dealer is registered as a mutual fund dealer and an exempt market dealer.
Registration Categories for Individuals
|Registrant||Sponsor (employer)||Permitted Products|
|Dealing Representative||Mutual Fund Dealer||Investment funds including mutual funds deposit products like GICsPrincipal protected notes (PPNs)Government of Canada, provincial and territorial government T-Bills, bonds and strip bond bankers acceptancesCommercial paper|
|*Dealing Representative||Exempt Market Dealer||Prospectus-exempt securities that the individual’s sponsoring firm has approved and is permitted to trade|
|*Registered Representative||IIROC||Trading and investment advising in securities such as: StocksFixed income productsMutual fundsDerivative products|
|*Investment Representative||IIROC||Trading in securities but does not provide investment advice for products such as: StocksFixed income productsMutual fundsDerivative products|
|Limited Trading Authorization Form||mfda.ca/regulation/forms/LAF_Form.pdf|
|MFDA Directory of Members||mfda.ca/members/members.html|
Time to practice
- When can you begin selling mutual funds?
when you receive confirmation from the Securities Regulators via the Registration Department of your mutual fund dealer
2. How often must you renew your registration?
there is no requirement to renew your registration but registration fees must be paid each year
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