BMO Nesbitt Burns Inc. - MRRS Decision
Headnote
MutualReliance Review System- investment dealer permitted to send statementof account to certain clients on a quarterly basis, but only inrespect of transactions made on behalf of these clients that consistsof the purchase of units of mutual funds or GICs by periodic deductionsof funds from the client's payroll or by pre-authorized payments,subject to certain terms and conditions.ApplicableOntario Statutory Provisions
SecuritiesAct, R.S.O. 1990, c.S.5, as amended, s. 36.ApplicableOntario Regulations
Regulationmade under the Securities Act, R.R.O. 1990, Reg. 1015,as amended s. 123.INTHE MATTER OF
THESECURITIES LEGISLATION OF BRITISH COLUMBIA,
ALBERTA,SASKATCHEWAN,
ONTARIO,QUEBEC, NOVA SCOTIA AND
NEWFOUNDLANDAND LABRADOR
AND
INTHE MATTER OF
THEMUTUAL RELIANCE REVIEW SYSTEM FOR
EXEMPTIVERELIEF APPLICATIONS
AND
INTHE MATTER OF
BMONESBITT BURNS INC.
MRRSDECISION DOCUMENT
WHEREASthe local securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Ontario,Quebec, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application from BMO Nesbitt Burns Inc. ("Nesbitt")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that the provision (the "Monthly StatementRequirement") contained in the Legislation that requires a dealerto send a statement of account to each client at the end of eachmonth in which the client has effected a transaction, where thereis a debit or credit balance or securities held, shall not applyto Nesbitt in respect of transactions made on behalf of a BMOGroup Plan Client (as defined below) that consists of the purchaseof units of mutual funds or GICs (as defined below) by periodicdeductions of funds from the BMO Group Plan Client's payroll orby pre-authorized payments, subject to certain terms and conditions; ANDWHEREAS under the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commissionis the principal regulator for this application; ANDWHEREAS Nesbitt has represented to the Decision Makersthat: 1.Nesbitt was incorporated under the laws of Canada with its headoffice located in Toronto, Ontario. 2.Nesbitt is an indirect, majority-owned subsidiary of the Bankof Montreal ("BMO") and is registered under the Legislation asa dealer in the categories of "broker" and "investment dealer"(or its equivalent) and is a member of the Investment DealersAssociation of Canada (the "IDA") and the Toronto Stock Exchange. 3.Nesbitt currently uses the Retail Information System and AutomaticData Processing system (collectively, the "RIS/ADP System") torecord all client transactions and security positions. 4.Nesbitt proposes to use the Consolidated Funds Management system(the "CFM System") owned and maintained by its parent, BMO, fortrading accounts opened by Nesbitt in connection with BMO MutualFunds Group RRSP/RESP/Savings Plans ("BMO Group Plans") wherethe account holder (the "BMO Group Plan Client") authorizes periodicdeductions of funds from the BMO Group Plan Client's payroll orby pre-authorized payments and directs that such funds be usedto purchase units of mutual funds and/or guaranteed investmentcertificates that are issued by a financial institution and canbe sold on an exempt basis or pursuant to a limited market dealerregistration (or its equivalent under the Legislation) ("GICs"). 5.The RIS/ADP and the CFM Systems are the record-keeping systemsthat store client information, record client transactions andsecurity positions, and generate the necessary statements of accountand trade confirmations. 6.Clients of Nesbitt that invest in mutual funds or GICs througha BMO Group Plan are able to access account overviews (includinga listing of current security holdings and the value of such holdings)and details of transactions that have occurred in the last twoweeks (including the date of the transaction, the type and amountof the security involved and the value of such transaction)(collectively,the "Account Details") at any time, without a fee, via telephoneusing an interactive voice response system (the "Interactive VoiceResponse System"). The Interactive Voice Response System alsoallows clients to request, at any time, that Account Details besent via facsimile. 7.If Nesbitt were registered as a dealer in the categories of "mutualfund dealer" and "limited market dealer" (or its equivalent inthe Jurisdictions), was a member of the Mutual Fund Dealers Association,held client accounts in nominee name and carried on the same activitiesas those stated in paragraph 4 above, it would only be requiredto send statements of account to BMO Group Plan Clients quarterly. ANDWHEREAS under the System, this MRRS Decision Documentevidences the decision of each Decision Maker (collectively, the"Decision"); ANDWHEREAS each of the Decision Makers is satisfied thatthe test contained in the Legislation that provides the DecisionMaker with the jurisdiction to make the Decision has been met; THEDECISION of the Decision Makers under the Legislationis that the Monthly Statement Requirement contained in the Legislationshall not apply to Nesbitt in respect of transactions made onbehalf of a BMO Group Plan Client that consists of the purchaseof units of mutual funds or GICs by periodic deductions of fundsfrom the BMO Group Plan Client's payroll or by pre-authorizedpayments, PROVIDED THAT: 1.Nesbitt sends a quarterly statement of account to the BMO GroupPlan Client for the relevant quarter, which sets out the sameinformation that is required under the Legislation for the MonthlyStatement Requirement; and 2.Account Details remain accessible to BMO Group Plan Clients, freeof charge, at any time, through the Interactive Voice ResponseSystem. February21, 2002 "DavidM. Gilkes"