Fidelity Investments Canada ULC -- s. 27
Headnote
Section 27 of the Securities Act (Ontario) -- amendment of the terms and conditions placed upon registration pursuant to previous decision exempting mutual fund dealer and portfolio manager from the requirement to be a member of the Mutual Fund Dealers Association of Canada -- definition of "Permitted Client" expanded to extended to include relatives related, through their relationship to their spouses, to an Executive or Employee or to an Executive or Employee of a Service Provider -- definition of "Registrant" amended to reflect change of name.
Statute Cited
Securities Act (Ontario), R.S.O. 1990, c. S.5, as am.
Rule Cited
Ontario Securities Commission Rule 31-506 SRO Membership -- Mutual Fund Dealers (revoked).
National Instrument 31-103 Registration Requirements and Exemptions.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
(the Act)
AND
IN THE MATTER OF
FIDELITY INVESTMENTS CANADA ULC
DECISION
(Section 27 of the Act)
UPON the Director having received an application (the Application) pursuant to section 27 of the Act from Fidelity Investments Canada ULC (the Filer) to amend the terms and conditions (the Existing Terms and Conditions) placed upon the Filer's registration as a mutual fund dealer pursuant to a decision of the Director dated March 14, 2002 (the Original Decision) and subsequently varied in a decision of the Director dated December 23, 2002 (the Variation Decision), so as to:
(a) expand the scope of the extended family members who may be its clients to include relatives related, through their relationship to their spouses, to an Executive or Employee (each as defined in the Existing Terms and Conditions) of the Filer or to an Executive or Employee of a Service Provider (as defined in the Existing Terms and Conditions) of the Filer by amending the definition of "Permitted Client"; and
(b) reflect the change of name of the Filer from its former name of "Fidelity Investments Canada Limited" by amending the definition of "Registrant";
UPON considering the Application and the recommendation of staff of the Ontario Securities Commission;
AND UPON the Filer having represented to the Director that:
1. The Filer is a corporation continued under the laws of Alberta, having its head office in Toronto.
2. The Filer is registered under the Act as a dealer in the category of mutual fund dealer and as an adviser in the category of portfolio manager. The Filer is also registered under the Commodity Futures Act (Ontario) as an adviser in the category of commodity trading manager.
3. The Filer is the manager of a number of mutual funds that it has established and will be the manager of other mutual funds it expects to establish in the future.
4. The securities of the mutual funds managed by the Filer are generally sold to the public through other registered dealers.
5. The Filer's trading activities as a mutual fund dealer currently represent and will continue to represent activities that are incidental to its principal business activities.
6. Pursuant to the Original Decision, the Filer was exempted, under its former name of "Fidelity Investments Canada Limited", from the requirement to be a member of the Mutual Fund Dealers Association (the MFDA) under Ontario Securities Commission Rule 31-506 SRO Membership -- Mutual Fund Dealers, now revoked and replaced by section 9.2 of National Instrument 31-103 Registration Requirements and Exemptions, subject to a proviso that the Filer comply with terms and conditions on its registration as a mutual fund dealer set out in Schedule "A" to the Original Decision.
7. Subsequently, pursuant to the Variation Decision, the terms and conditions on the Filer's registration as a mutual fund dealer pertaining to the deadline in respect of certain permitted activities for a transitional period were modified.
8. The Existing Terms and Conditions refer to the Filer's former name of "Fidelity Investments Canada Limited", which has changed to its current name on September 26, 2007, at the time the corporation was continued into Alberta.
9. The Existing Terms and Conditions permits the Filer to accept a wide range of extended family members who are blood relatives of an Executive or Employee (each as defined in the Existing Terms and Conditions) of the Filer or of a Service Provider (as defined in the Existing Terms and Conditions) as its clients in respect of trades in mutual fund securities, but does not permit the Filer to accept as clients relatives related to such persons through their relationship to their spouses (as defined in the Existing Terms and Conditions) who have the same degree of familial connection to the spouse.
10. This aspect of the Existing Terms and Conditions prevents the Filer from accepting as clients members of the extended families of the individuals referred to in paragraph 9 who, the Filer submits, ought to be permitted as clients under the exemption from the requirement to obtain MFDA membership given the way in which extended facilities function in modern society.
11. Any person or company that is not currently a client of the Filer will, before they are accepted as a client of the Filer, receive written notice from the Filer that:
The Filer is not currently a member, and does not intend to become a member, of the Mutual Fund Dealers Association of Canada (the MFDA); consequently, clients of the Filer will not have available to them investor protection benefits that would otherwise derive from membership of the Filer in the MFDA, including coverage under the MFDA Investor Protection Corporation (being the investor protection plan for clients of members of the MFDA).
Accordingly, the individuals who are proposed to be added to the scope of eligible clients would receive the above notice.
12. The Filer has agreed to the imposition of terms and conditions (the New Terms and Conditions), set out in the attached Schedule A, as a condition of its registration under the Act as a dealer in the category of mutual fund dealer in replacement of the Existing Terms and Conditions.
AND UPON the Director being satisfied that the Filer is suitable for registration under the Act and that the proposed amendment to registration is not otherwise objectionable;
IT IS THE DECISION of the Director, pursuant to section 27 of the Act, that the Existing Terms and Conditions to the Filer's registration as a mutual fund dealer be replaced with the New Terms and Conditions.
November 19, 2009
Schedule "A"
TERMS AND CONDITIONS OF REGISTRATION
OF
FIDELITY INVESTMENTS CANADA ULC
AS A MUTUAL FUND DEALER
Definitions
1. For the purposes hereof, except as otherwise defined below or unless the context otherwise requires, defined terms contained in National Instrument 14-101 Definitions have the same meaning in this Schedule "A".
2. For the purposes hereof, unless the context otherwise requires:
(a) "Act" means the Securities Act, R.S.O. 1990, c. S.5, as amended;
(b) "Adviser" means an adviser as defined in subsection 1(1) of the Act;
(c) "Client Name Trade" means, for the Registrant, a trade to, or on behalf of, a person or company, in securities of a mutual fund, that is managed by the Registrant or an affiliate of the Registrant, where the person or company is shown on the records of the mutual fund or of an other mutual fund managed by the Registrant or an affiliate of the Registrant as the holder of securities of such mutual fund, and the trade consists of:
(A) a purchase, by the person or company, through the Registrant, of securities of the mutual fund; or
(B) a redemption, by the person or company, through the Registrant, of securities of the mutual fund;
and where, the person or company is either a client of the Registrant that was not solicited by the Registrant or was an existing client of the Registrant on the Effective Date;
(d) "Commission" means the Ontario Securities Commission;
(e) "Effective Date" means November 19, 2009;
(f) "Employee", for the Registrant, means:
(A) an employee of the Registrant;
(B) an employee of an affiliated entity of the Registrant; or
(C) an individual that is engaged to provide, on a bona fide basis, consulting, technical, management or other services to the Registrant or to an affiliated entity of the Registrant, under a written contract between the Registrant or the affiliated entity and the individual or a consultant company or consultant partnership of the individual, and, in the reasonable opinion of the Registrant, the individual spends or will spend a significant amount of time and attention on the affairs and business of the Registrant or an affiliated entity of the Registrant;
(g) "Employee", for a Service Provider, means an employee of the Service Provider or an affiliated entity of the Service Provider, provided that, at the relevant time, in the reasonable opinion of the Registrant, the employee spends or will spend, a significant amount of time and attention on the affairs and business of:
(A) the Registrant or an affiliated entity of the Registrant; or
(B) a mutual fund managed by the Registrant or an affiliated entity of the Registrant;
(h) "Executive", for the Registrant, means a director, officer or partner of the Registrant or of an affiliated entity of the Registrant;
(i) "Executive", for a Service Provider, means a director, officer or partner of the Service Provider or of an affiliated entity of the Service Provider;
(j) "Exempt Trade", for the Registrant, means:
(i) a trade in securities of a mutual fund that is made between a person or company and an underwriter acting as purchaser or between or among underwriters; or
(ii) a trade in securities of a mutual fund for which the Registrant would be required to be registered under the Act as a dealer in the category of exempt market dealer;
(k) "Fund-on-Fund Trade", for the Registrant, means a trade that consists of:
(i) a purchase, through the Registrant, of securities of a mutual fund that is made by another mutual fund;
(ii) a purchase, through the Registrant, of securities of a mutual fund that is made by a counterparty, an affiliated entity of the counterparty or an other person or company, pursuant to an agreement to purchase the securities to effect a hedge of a liability relating to a contract for a specified derivative or swap made between the counterparty and another mutual fund; or
(iii) a sale, through the Registrant, of securities of a mutual fund that is made by another mutual fund where the party purchasing the securities is:
(A) a mutual fund managed by the Registrant or an affiliated entity of the Registrant; or
(B) a counterparty, affiliated entity or other person or company that acquired the securities pursuant to an agreement to purchase the securities to effect a hedge of a liability relating to a contract for a specified derivative or swap made between the counterparty and another mutual fund; and
where, in each case, at least one of the referenced mutual funds is a mutual fund that is managed by either the Registrant or an affiliated entity of the Registrant;
(l) an "In Furtherance Trade" means, for the Registrant, a trade by the Registrant that consists of any act, advertisement, or solicitation, directly or indirectly in furtherance of an other trade in securities of a mutual fund, where the other trade consists of:
(i) a purchase or sale of securities of a mutual fund that is managed by the Registrant or an affiliated entity of the Registrant; or
(ii) a purchase or sale of securities of a mutual fund where the Registrant acts as the principal distributor of the mutual fund; and
where, in each case, the purchase or sale is made by or through an other registered dealer if the Registrant is not otherwise permitted to make the purchase or sale pursuant to these terms and conditions;
(m) "Mutual Fund Instrument" means National Instrument 81-102 Mutual Funds, as amended;
(n) "Permitted Client", for the Registrant, means a person or company that is a client of the Registrant, and that is, or was at the time the person or company became a client of the Registrant:
(i) an Executive or Employee of the Registrant;
(ii) a Related Party of an Executive or Employee of the Registrant;
(iii) a Related Party of the spouse of an Executive or Employee of the Registrant;
(iv) a Service Provider of the Registrant or an affiliated entity of a Service Provider of the Registrant;
(v) an Executive or Employee of a Service Provider of the Registrant;
(vi) a Related Party of an Executive or Employee of a Service Provider of the Registrant; or
(vii) a Related Party of the spouse of an Executive or Employee of a Service Provider of the Registrant;
(o) "Permitted Client Trade" means, for the Registrant, a trade to a person who is a Permitted Client or who represents to the Registrant that he or she is a person included in the definition of Permitted Client, in securities of a mutual fund that is managed by the Registrant or an affiliate of the Registrant, and the trade consists of a purchase or redemption, by the person, through the Registrant, of securities of the mutual fund;
(p) "Registered Plan" means a registered pension plan, deferred profit sharing plan, registered retirement savings plan, registered retirement income fund, registered education savings plan or other deferred income plan registered under the Income Tax Act (Canada);
(q) "Registrant" means Fidelity Investment Canada ULC;
(r) "Regulation" means R.R.O. 1990, Reg. 1015, as amended, made under the Act;
(s) "Related Party", for a person, means an other person who is:
(i) the spouse of the person;
(ii) the issue of:
(A) the person,
(B) the spouse of the person, or
(C) the spouse of any person that is the issue of a person referred to in subparagraphs (A) or (B) above;
(iii) the parent, grandparent or sibling of the person, or the spouse of any of them;
(iv) the issue of any person referred to in paragraph (iii) above; or
(v) a Registered Plan established by, or for the exclusive benefit of, one, some or all of the foregoing;
(vi) a trust where one or more of the trustees is a person referred to above and the beneficiaries of the trust are restricted to one, some, or all of the foregoing; or
(vii) a corporation where all the issued and outstanding shares of the corporation are owned by one, some, or all of the foregoing;
(t) "securities", for a mutual fund, means shares or units of the mutual fund;
(u) "Seed Capital Trade" means a trade in securities of a mutual fund made to a person or company referred to in any of subparagraphs 3.1(1)(a)(i) to 3.1(1)(a)(iii) of the Mutual Fund Instrument; and
(v) "Service Provider", for the Registrant, means:
(i) a person or company that provides or has provided professional, consulting, technical, management or other services to the Registrant or an affiliated entity of the Registrant;
(ii) an Adviser to a mutual fund that is managed by the Registrant or an affiliated entity of the Registrant; or
(iii) a person or company that provides or has provided professional, consulting, technical, management or other services to a mutual fund that is managed by the Registrant or an affiliated entity of the Registrant
3. For the purposes hereof, a person or company is considered to be an "affiliated entity" of another person or company if one is a subsidiary entity of the other or if both are subsidiary entities of the same person or company, or if each of them is controlled by the same person or company.
4. For the purposes hereof, a person or company is considered to be controlled by a person or company if:
(a) in the case of a person or company
(i) voting securities of the first-mentioned person or company carrying more than 50 percent of the votes for the election of directors are held, otherwise than by way of security only, by or for the benefit of the other person or company; and
(ii) the votes carried by the securities are entitled, if exercised, to elect a majority of the directors of the first-mentioned person or company;
(b) in the case of a partnership that does not have directors, other than a limited partnership, the second-mentioned person or company holds more than 50 percent of the interests in the partnership; or
(c) in the case of a limited partnership, the general partner is the second-mentioned person or company.
5. For the purposes hereof, a person or company is considered to be a subsidiary entity of another person or company if:
(a) it is controlled by
(i) that other; or
(ii) that other and one or more persons or companies, each of which is controlled by that other; or
(iii) two or more persons or companies, each of which is controlled by that other; or
(b) it is a subsidiary entity of a person or company that is that other's subsidiary entity.
6. For the purposes hereof:
(a) "issue", "niece", "nephew" and "sibling" includes any person having such relationship through adoption, whether legally or in fact;
(b) "parent" and "grandparent" includes a parent or grandparent through adoption, whether legally or in fact;
(c) "registered dealer" means a person or company that is registered under the Act as a dealer in a category that permits the person or company to act as dealer for the subject trade; and
(d) "spouse", for an Employee or Executive, means a person who, at the relevant time, is the spouse of the Employee or Executive.
7. Any terms that are not otherwise defined in National Instrument 14-101 Definitions or specifically defined above shall, unless the context otherwise requires, have the meaning:
(a) specifically ascribed to such term in the Mutual Fund Instrument; or
(b) if no meaning is specifically ascribed to such term in the Mutual Fund Instrument, the same meaning the term would have for the purposes of the Act.
Restricted Registration
Permitted Activities
8. The registration of the Registrant as a mutual fund dealer under the Act shall be for the purposes only of trading by the Registrant in securities of a mutual fund where the trade consists of:
(a) a Client Name Trade;
(b) an Exempt Trade;
(c) a Fund-on-Fund Trade;
(d) an In Furtherance Trade;
(e) a Permitted Client Trade; or
(f) a Seed Capital Trade;
provided that, in the case of all trades that are only referred to in clauses (a) or (e), the trades are limited and incidental to the principal business of the Registrant.