Scotia Capital Inc. and Scotia iTRADE Corp.
Headnote
Multilateral Instrument 11-102 Passport System -- Process for Exemptive Relief Applications in Multiple Jurisdictions -- National Instrument 33-109 Registration Information (NI 33-109) -- relief from certain filing requirements of NI 33-109 in connection with a bulk transfer of business locations and registered and non-registered individuals under an amalgamation.
Multilateral Instruments Cited
Multilateral Instrument 11-102 Passport System.
National Instruments Cited
National Instrument 33-109 Registration Information.
June 29, 2009
IN THE MATTER OF
THE SECURITIES LEGISLATION OF
ONTARIO
(the Jurisdiction)
AND
IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF
APPLICATIONS IN MULTIPLE JURISDICTIONS
AND
IN THE MATTER OF
SCOTIA CAPITAL INC. (SCI)
AND SCOTIA ITRADE CORP. (SCOTIA ITRADE)
(the Filers)
DECISION
Background
The principal regulator in the Jurisdiction has received an application from the Filers for a decision under the securities legislation of Ontario (the Legislation) for relief pursuant to section 7.1 of National Instrument 33-109 Registration Information (NI 33-109) to allow the bulk transfer of all of the registered individuals and all of the locations of each of the Filers to a new amalgamated entity, Scotia Capital Inc. (as described below) (the Bulk Transfer), on or about November 1, 2009 in accordance with section 3.1 of the companion policy to NI 33-109 (the Exemption Sought).
Under the Process for Exemptive Relief Applications in Multiple Jurisdictions:
(i) the Ontario Securities Commission is the principal regulator for this application; and
(ii) the Filers have provided notice that subsection 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon by each of the Filers on the same basis in all of the other provinces and territories of Canada (together with Ontario, the Jurisdictions).
Interpretation
Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.
Representations
This decision is based on the following facts represented by the Filers:
SCI
1. SCI is a subsidiary of The Bank of Nova Scotia (the Bank) and is 95% owned by the Bank and 5% owned by Scotia Securities Inc., which is a direct wholly-owned subsidiary of the Bank. The head office of SCI is in Ontario.
2. SCI is registered as a dealer in the category of investment dealer under the Securities Act (Ontario) and in the category of futures commission merchant under the Commodity Futures Act (Ontario). SCI maintains equivalent registrations in each of the other provinces and territories of Canada.
3. SCI is not in default of the securities legislation in any of the Jurisdictions.
Scotia iTRADE
4. Scotia iTRADE is an indirect wholly-owned subsidiary of SCI. The head office of Scotia iTRADE is in Ontario.
5. Scotia iTRADE is registered as a dealer in the category of investment dealer (or its equivalent) in all of the provinces of Canada.
6. Scotia iTRADE is not in default of the securities legislation in any of the Jurisdictions.
Amalgamation
7. SCI has confirmed that it will amalgamate with Scotia iTRADE and three private companies directly or indirectly wholly-owned by SCI (3045175 Nova Scotia Company, EGI Capital Corporation, and Scotia Trading Technologies Corporation (collectively, the Private Companies)) on November 1, 2009. The new amalgamated entity will be named Scotia Capital Inc. (Amalco).
8. None of the Private Companies are currently registered in any of the Jurisdictions.
9. Effective on November 1, 2009, all of the current registrable activities of Scotia iTRADE and SCI will become the responsibility of Amalco. Amalco will assume all of the existing registrations and approvals for all of the registered individuals and all of the locations of the Filers. It is not anticipated that there will be any disruption in the ability of the Filers to trade on behalf of their respective clients, and Amalco should be able to trade on behalf of such clients immediately after the amalgamation.
10. Amalco will continue to be registered in the same categories of registration as SCI and Scotia iTRADE, together, are registered immediately prior to the amalgamation in the respective Jurisdictions, and will be subject to, and will comply with, all applicable securities laws.
11. Amalco will carry on the same securities business of the Filers in substantially the same manner with essentially the same personnel.
12. The Exemption Sought will not be contrary to the public interest and will have no negative consequences on the ability of Amalco to comply with all applicable regulatory requirements or the ability to satisfy any obligations in respect of the clients of the Filers.
13. Given the significant number of registered individuals of SCI and Scotia iTRADE, it would be extremely difficult to transfer each individual to Amalco in accordance with the requirements of NI 33-109 if the Exemption Sought is not granted.
14. A customer communication plan has been developed and customers of Scotia iTRADE will be advised 60 days prior to the amalgamation.
15. The head office of Amalco will be SCI's current head office location, which is located at 40 King Street West, Scotia Plaza, Toronto, Ontario, M5W 2X6 Telephone: (416) 863-7411 Fax: (416) 862-3052.
Decision
The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision.
The decision of the principal regulator under the Legislation is that the Exemption Sought is granted provided that the Filers make acceptable arrangements with CDS Inc. for the payment of the costs associated with the Bulk Transfer, and make such payment in advance of the Bulk Transfer.
June 29, 2009