31-512 (Blanket Order) - Transitional Relief for IIROC Member Firms

Securities Act
R.S.P.E.I. 1988, Cap.-S-3.1

Document Type: Blanket Order
Document No.: 31-512
Subject: Transitional relief from the requirement to provide the relationship disclosure information prescribed by section 14.2(1) of NI 31-103 for IIROC member firms
Effective Date: September 28, 2011

Blanket Order 31-512

Transitional relief from the requirement to provide the relationship disclosure information prescribed by section 14.2(1) of NI 31-103 for IIROC member firms

Part 1 Definitions

1.1  Unless otherwise defined in this decision or the context otherwise requires, terms used in this decision that are defined in National Instrument 31-103 Registration Requirements and Exemptions (NI 31-103) or National Instrument 14-101 Definitions have the same meaning.

Part 2 Background

2.1  Under section 14.2(1) [Relationship disclosure information] of NI 31-103, a registered firm must deliver to a client all information that a reasonable investor would consider important about the client’s relationship with the registrant.

2.2  The Investment Industry Regulatory Organization of Canada (IIROC) is currently finalizing its proposal on relationship disclosure information (the IIROC RDI Proposal), most recently published on January 7, 2011 in IIROC Notice 11-0005 Proposals to implement the core principles of the Client Relationship Model - Proposed amendments - New Rule XXOO - Relationship disclosure.

2.3  The purpose of the IIROC RDI Proposal is to set out detailed requirements to assist registered firms who are IIROC members to comply with the general principle in section 14.2(1) of NI 31-103.

2.4  Under section 16.14 of NI 31-103, temporary relief from the application of section 14.2(1) of NI 31-103 was available until September 28, 2010 to persons that were registered on the date when NI 31-103 came into effect.

2.5  On September 28, 2010, the Superintendent issued Blanket Order 31-109 providing further temporary relief from the application of section 14.2(1) of NI 31-103 until September 28, 2011 to IIROC members.

2.6  The temporary relief was provided in anticipation of the finalization of the IIROC RDI Proposal.  It is now anticipated that the IIROC RDI Proposal will be finalized and new IIROC member rules reflecting the IIROC RDI Proposal (the IIROC RDI Rules) will be approved before the end of 2011 with provisions for their implementation in phases over a two-year transition period.

2.7  If a registered firm that is a member of IIROC is required to comply with section 14.2(1) of NI 31-103 on September 28, 2011, it will be required to prepare detailed relationship disclosure information and may incur significant costs changing its relationship disclosure communications when the IIROC RDI Rules are implemented.

2.8  Since the IIROC RDI Rules are likely to come into force before the end of 2011, and be implemented in phases during a two-year transition period, the cost that IIROC members will incur by having to comply with section 14.2(1) of NI 31-103 on September 2, 2011 in the interim is not justified.

Part 3 Order

3.1  Section 14.2(1) of NI 31-103 does not apply to registered firms that are members of IIROC, provided that after the IIROC RDI Rules are approved, the IIROC member complies with the IIROC RDI Rules subject to applicable transition periods.

Part 4 Effective Date

4.1  This Order will come into effect on September 28, 2011 and expires on December 31, 2013.

Dated at Charlottetown, Prince Edward Island, this 28th day of September, 2011.