Amundi Asset Management et al. – ss. 78(1) and 80 of the CFA
Headnote
Section 80 of the Commodity Futures Act (Ontario) -- Foreign adviser exempted from the adviser registration requirement in paragraph 22(1)(b) of the CFA where such adviser acts as an adviser in respect of commodity futures contracts or commodity futures options (Contracts) for certain investors in Ontario who meet the definition of "permitted client" in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Contracts are primarily traded on commodity futures exchanges outside of Canada and primarily cleared outside of Canada.
Terms and conditions of exemption correspond to the relevant terms and conditions of the comparable exemption from the adviser registration requirement available to international advisers in respect of securities set out in section 8.26 of National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Exemption also subject to a "sunset clause" condition.
Subsection 78(1) of the Commodity Futures Act (Ontario) -- Order also revokes prior order of the Commission dated June 13, 2018, In the Matter of Amundi Asset Management.
Applicable Legislative Provisions
Commodity Futures Act, R.S.O. 1990, c. C.20. as am., ss. 1(1), 22(1)(b), 78(1), 80.
Securities Act, R.S.O. 1990, c. S.5, as am., s. 25(3).
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 1.1, 8.26.
Ontario Securities Commission Rule 13-502 Fees, Part 3 and s. 6.4.
Applicable Order
In the Matter of Amundi Asset Management, dated June 13, 2018, 41 OSCB 5093.
April 17, 2019
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C. 20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
AMUNDI ASSET MANAGEMENT,
AMUNDI (UK) LTD. AND
AMUNDI SGR S.P.A.
ORDER
(Subsection 78(1) and section 80 of the CFA)
UPON the application (the Application) of Amundi Asset Management (Amundi AM), Amundi (UK) Ltd. and Amundi SGR S.p.A. (each, an Applicant and collectively, the Applicants) to the Ontario Securities Commission (the Commission) for:
(a) an order, pursuant to subsection 78(1) of the CFA, revoking the exemption order granted by the Commission to Amundi AM on June 13, 2018 (the Existing Order); and
(b) an order, pursuant to section 80 of the CFA, that each Applicant and any individuals engaging in, or holding themselves out as engaging in, the business of advising others as to trading in Contracts (as defined below) on such Applicant's behalf (the Representatives) be exempt, for a specified period of time, from the adviser registration requirement in paragraph 22(1)(b) of the CFA, subject to certain terms and conditions;
AND UPON considering the Application and the recommendation of staff of the Commission;
AND WHEREAS for the purposes of this Order:
"CFA Adviser Registration Requirement" means the provisions of section 22 of the CFA that prohibit a person or company from acting as an adviser with respect to trading in Contracts unless the person or company is registered in the appropriate category of registration under the CFA;
"Contract" has the meaning ascribed to that term in subsection 1(1) of the CFA;
"Foreign Contract" means a Contract that is primarily traded on one or more organized exchanges that are located outside of Canada and primarily cleared through one or more clearing corporations that are located outside of Canada;
"Home Jurisdiction" means the jurisdiction in which an Applicant's head office is located;
"International Adviser Exemption" means the exemption set out in section 8.26 of NI 31-103 from the OSA Adviser Registration Requirement;
"NI 31-103" means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, as amended from time to time;
"OSA" means the Securities Act, R.S.O. 1990, c. S.5, as amended from time to time;
"OSA Adviser Registration Requirement" means the provisions of section 25 of the OSA that prohibit a person or company from acting as an adviser with respect to investing in, buying or selling securities unless the person or company is registered in the appropriate category of registration under the OSA;
"Permitted Client" means a client in Ontario that is a "permitted client", as that term is defined in section 1.1 of NI 31-103, except that for purposes of this Order such definition shall exclude a person or company registered as an adviser or dealer under the securities or derivatives legislation, including commodity futures legislation, of a jurisdiction of Canada; and
"specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information;
AND UPON the Applicants having represented to the Commission that:
Amundi AM
1. Amundi AM is a joint stock company formed under the laws of France with its principal place of business located in Paris, France.
2. Amundi AM is registered to provide portfolio management services as an asset management company (société de gestion de portefeuille) with the Autorité des Marchés Financiers in France (the AMF) and is authorized to advise on investments including Contracts.
3. Amundi AM engages in the business of an adviser with respect to securities and with respect to Contracts in France and the United Kingdom. Amundi AM provides investment management services to its clients on a fully discretionary basis, through funds and separately managed accounts across multiple strategies and financial instruments, including Foreign Contracts.
4. Amundi AM has "passported" its AMF registration to the United Kingdom, and accordingly is authorized to provide services in the United Kingdom through its London branch.
5. Amundi AM currently provides advice on Contracts to Permitted Clients in Canada mainly through its London branch pursuant to this "passported" registration and the Existing Order.
6. Amundi AM is not registered in any capacity under the CFA or the OSA. Amundi AM has availed itself of the International Adviser Exemption in Ontario.
7. Amundi AM currently relies on the Existing Order and has complied with, and is currently in compliance with, all the terms and conditions of the Existing Order.
8. As a result of the uncertainty surrounding the proposed exit of the United Kingdom from the European Union (Brexit), Amundi AM plans, among other things, to restructure certain of its current advisory activities (including advising certain Canadian clients via its current structure through its London branch), to Amundi (UK) Ltd. (Amundi UK), an existing United Kingdom company which is registered as an adviser with the Financial Conduct Authority (the FCA) in the United Kingdom.
Amundi UK
9. Amundi UK is a company formed under the laws of England and Wales with its principal place of business located in London, United Kingdom.
10. Amundi UK is authorised by the FCA to provide investment advisory, discretionary portfolio management and execution only services on investments that it manages for institutional investors, including Contracts.
11. Amundi UK engages in the business of an adviser with respect to securities and with respect to Contracts in the United Kingdom. Amundi UK provides investment management services to its clients on a fully discretionary basis, through funds and separately managed accounts across multiple strategies and financial instruments, including Foreign Contracts.
12. Amundi UK is not registered in any capacity under the CFA or the OSA.
Amundi SGR S.p.A.
13. Amundi SGR S.p.A. (Amundi Italy) is a limited liability company formed under the laws of Italy with its principal place of business located in Milan, Italy.
14. Amundi Italy is registered with the registered with the Bank of Italy and is authorized to advise on investments including Contracts.
15. Amundi Italy engages in the business of an adviser with respect to securities and with respect to Contracts in Italy. Amundi Italy provides investment management services to its clients on a fully discretionary basis, through funds and separately managed accounts across multiple strategies and financial instruments, including Foreign Contracts.
16. Amundi Italy is not registered in any capacity under the CFA or the OSA.
17. Amundi Canada Inc., an affiliate of the Applicants, will be launching new pooled funds in Canada which will utilize Foreign Contracts as part of their investment strategy. As investment fund manager of the pooled funds, Amundi Canada Inc. will retain each of Amundi AM and Amundi Italy to be the direct portfolio manager to one or more of the pooled funds in respect of Foreign Contracts.
18. None of the Applicants is in default of securities legislation, commodity futures legislation or derivatives legislation of any jurisdiction in Canada. Each Applicant is in compliance in all material respects with the securities laws, commodity futures laws and derivatives laws of its Home Jurisdiction.
19. The Applicants are affiliates, as defined in the OSA. Each Applicant is either directly or indirectly wholly-owned by its parent company, Amundi S.A.
20. In Ontario, certain institutional investors that are Permitted Clients have engaged or seek to engage one or more of the Applicants as a discretionary investment manager for purposes of implementing certain specialized investment strategies.
21. Amundi AM acts, and the other Applicants seek to act, as a discretionary commodity futures advisory manager for Canadian institutional investors that are Permitted Clients. Each Applicant's advisory services to Permitted Clients include or would include the use of specialized investment strategies employing Foreign Contracts.
22. Were the proposed advisory services limited to securities (as defined in subsection 1(1) of the OSA), each Applicant would be able to rely on the International Adviser Exemption and carry out such activities for Permitted Clients on a basis that would be exempt from the OSA Adviser Registration Requirement.
23. There is currently no exemption from the CFA Adviser Registration Requirement that is equivalent to the International Adviser Exemption. Consequently, in order to advise Permitted Clients as to trading in Foreign Contracts, in the absence of this Order, each Applicant would be required to satisfy the CFA Adviser Registration Requirement by applying for and obtaining registration in Ontario as an adviser under the CFA in the category of commodity trading manager.
24. Each Applicant confirms that, to the best of such Applicant's knowledge, there are currently no regulatory actions of the type contemplated by the Notice of Regulatory Action attached as Appendix "B", other than those previously filed with the Commission by Amundi AM.
AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to make this Order;
IT IS ORDERED, pursuant to subsection 78(1) of the CFA, that the Existing Order is revoked;
AND IT IS ORDERED, pursuant to section 80 of the CFA, that each Applicant and its Representatives are exempt from the adviser registration requirement in paragraph 22(1)(b) of the CFA in respect of providing advice to Permitted Clients as to the trading of Foreign Contracts provided that, in the case of each Applicant:
(a) the Applicant provides advice to Permitted Clients only as to trading in Foreign Contracts and does not advise any Permitted Client as to trading in Contracts that are not Foreign Contracts, unless providing such advice is incidental to its providing advice on Foreign Contracts;
(b) the Applicant's head office or principal place of business remains in its Home Jurisdiction;
(c) the Applicant is registered in a category of registration, or operates under an exemption from registration, under the applicable securities or commodity futures legislation of its Home Jurisdiction that permits it to carry on the activities in that jurisdiction that registration under the CFA as an adviser in the category of commodity trading manager would permit it to carry on in Ontario;
(d) the Applicant continues to engage in the business of an adviser (as defined in the CFA) in its Home Jurisdiction;
(e) as at the end of the Applicant's most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the Applicant, its affiliates and its affiliated partnerships (excluding the gross revenue of an affiliate or affiliated partnership of the Applicant if the affiliate or affiliated partnership is registered under securities legislation, commodity futures legislation or derivatives legislation of a jurisdiction of Canada) was derived from the portfolio management activities of the Applicant, its affiliates and its affiliated partnerships in Canada (which, for greater certainty, includes both securities-related and commodity-futures-related activities);
(f) before advising a Permitted Client with respect to Foreign Contracts, the Applicant notifies the Permitted Client of all of the following:
(i) the Applicant is not registered in Ontario to provide the advice described in paragraph (a) of this Order;
(ii) the foreign jurisdiction in which the Applicant's head office or principal place of business is located;
(iii) all or substantially all of the Applicant's assets may be situated outside of Canada;
(iv) there may be difficulty enforcing legal rights against the Applicant because of the above; and
(v) the name and address of the Applicant's agent for service of process in Ontario;
(g) if the Applicant is not registered under the OSA and does not rely on the International Adviser Exemption, the Applicant has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service in the form attached as Appendix "A";
(h) the Applicant notifies the Commission of any regulatory action initiated after the date of this Order with respect to the Applicant or, to the best of the Applicant's knowledge after reasonable inquiry, any predecessors or the specified affiliates of the Applicant by completing and filing Appendix "B" within 10 days of the commencement of each such action; and
(i) if the Applicant is not subject to the requirement to pay a participation fee in Ontario because it is not registered under the OSA and does not rely on the International Adviser Exemption, by December 31st of each year, such Applicant pays a participation fee based on its specified Ontario revenues for its previous financial year in compliance with the requirements of Part 3 and section 6.4 of Ontario Securities Commission Rule 13-502 Fees as if the Applicant relied on the International Adviser Exemption; and
IT IS FURTHER ORDERED that this Order will terminate on the earliest of:
(a) the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;
(b) six months, or such other transition period as may be provided by law, after the coming into force of any amendment to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the ability of an Applicant to act as an adviser to a Permitted Client; and
(c) five years after the date of this Order.
Dated at Toronto, Ontario, this 16 day of April, 2019.
APPENDIX "A"
SUBMISSION TO JURISDICTION AND APPOINTMENT OF AGENT FOR SERVICE
INTERNATIONAL DEALER OR INTERNATIONAL ADVISER EXEMPTED FROM REGISTRATION UNDER THE COMMODITY FUTURES ACT (ONTARIO)
INTERNATIONAL DEALER OR INTERNATIONAL ADVISER EXEMPTED FROM REGISTRATION UNDER THE COMMODITY FUTURES ACT (ONTARIO)
1. Name of person or company ("International Firm"):
2. If the International Firm was previously assigned an NRD number as a registered firm or an unregistered exempt international firm, provide the NRD number of the firm:
3. Jurisdiction of incorporation of the International Firm:
4. Head office address of the International Firm:
5. The name, e-mail address, phone number and fax number of the International Firm's individual(s) responsible for the supervisory procedure of the International Firm, its chief compliance officer, or equivalent.
Name:E-mail address:Phone:Fax:
6. The International Firm is relying on an exemption order under section 38 or section 80 of the Commodity Futures Act (Ontario) that is similar to the following exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (the "Relief Order"):
[ ] Section 8.18 [international dealer]
[ ] Section 8.26 [international adviser]
[ ] Other [specify]:
7. Name of agent for service of process (the "Agent for Service"):
8. Address for service of process on the Agent for Service:
9. The International Firm designates and appoints the Agent for Service at the address stated above as its agent upon whom may be served a notice, pleading, subpoena, summons or other process in any action, investigation or administrative, criminal, quasi-criminal or other proceeding (a "Proceeding") arising out of or relating to or concerning the International Firm's activities in the local jurisdiction and irrevocably waives any right to raise as a defence in any such proceeding any alleged lack of jurisdiction to bring such Proceeding.
10. The International Firm irrevocably and unconditionally submits to the non-exclusive jurisdiction of the judicial, quasi-judicial and administrative tribunals of the local jurisdiction in any Proceeding arising out of or related to or concerning the International Firm's activities in the local jurisdiction.
11. Until 6 years after the International Firm ceases to rely on the Relief Order, the International Firm must submit to the regulator
a. a new Submission to Jurisdiction and Appointment of Agent for Service in this form no later than the 30th day before the date this Submission to Jurisdiction and Appointment of Agent for Service is terminated;
b. an amended Submission to Jurisdiction and Appointment of Agent for Service no later than the 30th day before any change in the name or above address of the Agent for Service; and
c. a notice detailing a change to any information submitted in this form, other than the name or above address of the Agent for Service, no later than the 30th day after the change.
12. This Submission to Jurisdiction and Appointment of Agent for Service is governed by and construed in accordance with the laws of the local jurisdiction.
Dated: _______________
______________________________
(Signature of the International Firm or authorized signatory)
______________________________
(Name of signatory)
______________________________
(Title of signatory)
Acceptance
The undersigned accepts the appointment as Agent for Service of _______________ [Insert name of International Firm] under the terms and conditions of the foregoing Submission to Jurisdiction and Appointment of Agent for Service.
Dated: ____________________
______________________________
(Signature of the Agent for Service or authorized signatory)
______________________________
(Name of signatory)
______________________________
(Title of signatory)
This form, and notice of a change to any information submitted in this form, is to be submitted through the Ontario Securities Commission's Electronic Filing Portal:
https://www.osc.gov.on.ca/filings
APPENDIX B
NOTICE OF REGULATORY ACTION{1}
1. Has the firm, or any predecessors or specified affiliates of the firm entered into a settlement agreement with any financial services regulator, securities or derivatives exchange, SRO or similar agreement with any financial services regulator, securities or derivatives exchange, SRO or similar organization?
Yes [ ] No [ ]
If yes, provide the following information for each settlement agreement:
- - - - - - - - - - - - - - - - - - - -
Name of entity
Regulator/organization
Date of settlement (yyyy/mm/dd)
Details of settlement
Jurisdiction
- - - - - - - - - - - - - - - - - - - -
2. Has any financial services regulator, securities or derivatives exchange, SRO or similar organization:
Yes
No
(a)
Determined that the firm, or any predecessors or specified affiliates of the firm violated any securities regulations or any rules of a securities or derivatives exchange, SRO or similar organization?
_____
_____
(b)
Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?
_____
_____
(c)
Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?
_____
_____
(d)
Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?
_____
_____
(e)
Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?
_____
_____
(f)
Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?
_____
_____
(g)
Issued an order (other than an exemption order) or a sanction to the firm, or any predecessors or specified affiliates of the firm for securities or derivatives-related activity (e.g. cease trade order)?
_____
_____
If yes, provide the following information for each action:
Name of Entity
Type of Action
Regulator/organization
Date of action (yyyy/mm/dd)
Reason for action
Jurisdiction
3. Is the firm aware of any ongoing investigation of which the firm or any of its specified affiliate is the subject?
Yes [ ] No [ ]
If yes, provide the following information for each investigation:
- - - - - - - - - - - - - - - - - - - -
Name of entity
Reason or purpose of investigation
Regulator/organization
Date investigation commenced (yyyy/mm/dd)
Jurisdiction
- - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - -
Name of firm
Name of firm's authorized signing officer or partner
Title of firm's authorized signing officer or partner
Signature
Date (yyyy/mm/dd)
- - - - - - - - - - - - - - - - - - - -
Witness
The witness must be a lawyer, notary public or commissioner of oaths.
- - - - - - - - - - - - - - - - - - - -
Name of witness
Title of witness
Signature
Date (yyyy/mm/dd)
- - - - - - - - - - - - - - - - - - - -
This form is to be submitted through the Ontario Securities Commission's Electronic Filing Portal:
https://www.osc.gov.on.ca/filings
{1} Terms defined for the purposes of Form 33-506F6 Firm Registration to Ontario Securities Commission Rule 33-506 (Commodity Futures Act) Registration Information have the same meaning if used in this Appendix except that any reference to "firm" means the person or company relying on relief from the requirement to register as an adviser or dealer under the Commodity Futures Act (Ontario).