New Registration Exemption For Foreign Dealers And Advisers Trading Or Advising In Standardized Derivatives In Quebec
Copyright 2009, Blake, Cassels & Graydon
Originally published in Blakes Bulletin on Securities
Regulation, August 2009
The Quebec Autorité des marchés financiers (the
Authority) published a draft amending regulation (Amending
Regulation) under the Quebec Derivatives Act (the QDA) on
July 31, 2009 which provides for a new exemption from the
registration requirements of the QDA for foreign dealers or
advisers who trade or advise in standardized derivatives (the
Standardized Derivatives Exemption).
The Standardized Derivatives Exemption applies where:
the person is authorized to act as a dealer or adviser or
exercise similar functions in a jurisdiction outside Quebec where
its head office or principal place of business is located (the
foreign dealer or adviser);
the foreign dealer or adviser carries on business solely with
"accredited counterparties" (ACs) within the meaning of
the QDA (we discuss the definition of ACs in greater detail below);
the activity involves a "standardized derivative"
that is offered primarily outside Quebec. The QDA defines
"standardized derivative" as a derivative that is traded
on a published market, whose instrinsic characteristics are
determined by that market and whose trade is cleared and settled by
a clearing house.
Subject to government approval, the Amending Regulation is
scheduled to come into force on September 28, 2009, in tandem with
National Instrument 31-103 – Registration
Requirements and Exemptions (NI 31-103).
RELATIONSHIP TO CURRENT OTC DERIVATIVES EXEMPTION AND EXEMPTION
FOR SPECIFIED OPTIONS AND FUTURES
Currently, the QDA contains a carve-out from the registration
requirements with respect to over-the-counter (OTC) derivatives
activities or transactions involving ACs only (the OTC Derivatives
Exemption). The Standardized Derivatives Exemption once in force
will provide relief complementary to the OTC Derivatives Exemption
in relation to standardized derivatives activities. As mentioned,
the dealer or adviser must be licensed in its home jurisdiction and
the standardized derivative must be offered primarily outside
Quebec for the Standardized Derivatives Exemption to apply.
When the QDA was brought into force on February 1, 2009, the
Authority adopted a blanket decision (the Blanket Decision)
exempting certain specified options and futures from the QDA where
such instruments are offered to "accredited investors"
(AIs) within the meaning of Regulation 45-106 respecting
To continue readingFREE SIGN UP