Conducting securities trading or advising activities in Canada – International Dealer Exemption

Canadian securities regulators require that entities or individuals that conduct certain specified activities must first be registered with the securities regulatory authorities in the Canadian provinces or territories in which such activities are conducted. Firms and individuals must register if they are in the business of trading or advising in securities, acting as an underwriter, or acting as an investment fund manager. There are, however, numerous exemptions available to the registration requirement. For foreign adviser or dealers, the most commonly used exemptions are (1) international adviser; (2) international sub-adviser; and (3) international dealer. This article is part of a multi-part series, and discusses the international dealer exemption.

The international dealer exemption allows dealers with their head office or principal place of business in a foreign jurisdiction to conduct certain, limited and prescribed trading activities, with a prescribed category of clients. The dealer is subject to other conditions including that the dealer: must be registered to perform such functions in the foreign jurisdiction; engages in the business of a dealer in the foreign jurisdiction; is trading as principal or agent for (i) the issuer of the securities; (ii) a “permitted client” ; or (iii) a person or company that is not a resident of Canada; appoints an agent for service; and notifies the Canadian securities regulator. While it has its limitations, the international dealer exemption may be an option for certain foreign dealers. Please consult with Canadian legal counsel to learn the details about this exemption and whether you qualify.

This article is an overview only and does not constitute legal advice. It is not intended to be a complete statement of the law or the proposed regulations. You should not act upon the information in this article without a thorough examination of the law or proposed regulations as applied to the facts of your situation.

[1] “Permitted client” is defined in National Instrument 31-103: Registration Requirements, Exemptions and Ongoing Registration Requirements and includes certain institutional and high-net worth investors.

About the author: Nancy Mehrad is a securities lawyer based in Canada, and the CEO and Founder of Registrant Law Professional Corporation. Nancy can be reached by email at nancy@registrantlaw.com.