Relevant information regarding the transitional phase
During the transitional phase, activities carried out in Québec by mutual fund dealers registered in Québec will remain subject to the provisions of Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations, c. V-1.1, r.10 and the applicable laws of Québec.
New SRO has issued orders exempting, effective January 1, 2023, all mutual fund dealers registered in Québec from the application of its rules to their activities in Québec (except for rules necessary to its smooth functioning), and from having to file an application for exemption or communicate any further information to New SRO.
What to expect, by regulatory topic:
Mutual fund dealers registered in Québec, and their Dealing Representatives, should contact the Autorité des marchés financiers (“AMF”) with their registration questions. The AMF remains responsible for the registration of both individuals and dealers during this transitional phase. The same goes for the chief compliance officers and ultimate designated persons of mutual fund dealers registered in Québec.
A company wishing to register as a mutual fund dealer in Québec after January 1, 2023 must file an application for registration with the AMF, as well as an application for membership in New SRO. New SRO will exempt the company from the application of its rules, except for rules necessary to its smooth functioning, as they pertain to its mutual fund activities in Québec.
The AMF and New SRO will coordinate their actions, notably regarding the registration, suspension, or revocation of registration of a mutual fund dealer.
Dealing representatives of mutual fund dealers registered in Québec are exempt from the continuing education requirements of New SRO for their activities carried out in Québec. They may instead contact the Chambre de la sécurité financière (“CSF”), which is responsible for regulating continuing education for Dealing Representatives of mutual fund dealers registered in Québec.
Mutual fund dealers registered in Québec will continue to be inspected by the AMF as regards their activities conducted in Québec.
Complaints and inquiries
Complaints and inquiries concerning activities carried out in Québec by mutual fund dealers and their registered representatives continue to be managed by the AMF.
Any complaints or inquiries submitted to New SRO regarding mutual fund activities conducted in Québec will be forwarded to the AMF or the CSF, as applicable.
Investor protection fund
Québec’s mutual fund dealers will not be contributing to New SRO’s investor protection fund for their activities carried out in Québec. They will continue to contribute to the Fonds d’indemnisation des services financiers (“FISF”) (financial services compensation fund) for said activities.
Investigation and prosecution
The AMF and the CSF will continue to conduct investigations and initiate disciplinary proceedings, according to their respective jurisdictions, in respect of activities carried out in Québec by mutual fund dealers and their registered representatives.
Furthermore, the AMF, the CSF and New SRO will cooperate in order to maintain regular and effective communications and will coordinate their efforts and actions for the enforcement of applicable legislative and regulatory provisions.
New SRO does not charge membership dues to mutual fund dealers registered in Québec, nor to their registered representatives for their activities in Québec.
If the New SRO were to provide services to mutual fund dealers registered Québec, fees could be applicable, prorated to the services rendered.
New SRO’s provisional rules take effect on January 1, 2023 and will allow registered firms to combine their investment dealer activities and their mutual fund dealer activities under one single legal entity. The New SRO rules, as well as the legislative and regulatory provisions applicable to mutual fund dealers registered in Québec, including those set out in Regulation 31-103, are applicable to these firms.
Dealing representatives of these firms whose activities are limited to mutual funds fall under the category of Dealing Representative of a Mutual Fund Dealer and must be members of the CSF. For more information, read the FAQ.
Voluntary application of New SRO rules
The AMF has stated that it is open to receiving applications for exemptive relief from mutual fund dealers, including firms with dual registrations, which would like their mutual fund activities in Québec to be governed by the rules of New SRO, rather than by the equivalent provisions of Regulation 31-103 during the transitional phase. As applicable, the AMF will coordinate its actions with New SRO, notably so that the activities of these mutual fund dealers registered in Québec can be supervised primarily by New SRO. If you would like to file an application for exemptive relief, please email: [email protected].
Participation in consultations of the New SRO
Mutual fund dealers registered in Québec will be able to participate as members in the committee work and consultations of New SRO effective January 1, 2023; this includes working on the development of the New SRO’s revised rules that will apply to them when the transitional phase ends. This will allow those MFDs, including smaller dealers and multidisciplinary firms, to contribute any specific concerns they may have regarding their own situation and business model, so that the revised rules of the New SRO may take appropriate account of their concerns.
The New SRO’s Regional Council for Québec has set up a Mutual Funds Subcommittee specifically to enable Québec’s mutual fund members to participate in the regulatory discussions.
If you are interested in sitting on the Mutual Funds Subcommittee, please contact Ms. France Kingsbury, Regional Director, Regulation at [email protected] for more information.