E D & F Man Capital Markets Limited and E D & F Man Capital Markets Inc. – s. 38 of the CFA and s. 6.1 of Rule 91-502 Trades in Recognized Options
Headnote
Application for a ruling pursuant to section 38 of the Commodity Futures Act granting relief from the dealer registration requirement set out in section 22 of the CFA and the trading restrictions in section 33 of the CFA in connection with certain trades in Exchange-Traded Futures on Non-Canadian Exchanges where the Applicant is acting as principal or agent in such trades to, from or on behalf of Permitted Clients -- relief subject to sunset clause.
Application to the Director for an exemption, pursuant to section 6.1 of OSC Rule 91-502 Trades in Recognized Options (Rule 91-502), exempting the Applicant and its Representatives from the proficiency requirements in section 3.1 of Rule 91-502 for trades in commodity futures options on exchanges located outside Canada.
Statutes Cited
Commodity Futures Act, R.S.O. 1990, c. C.20. as am., ss. 22 and 38.
Rules Cited
Ontario Securities Commission Rule 91-502 Trades in Recognized Options, ss. 3.1 and 6.1.
February 13, 2020
IN THE MATTER OF THE COMMODITY FUTURES ACT, R.S.O. 1990, c. C.20, AS AMENDED (the CFA) AND IN THE MATTER OF THE SECURITIES ACT, R.S.O. 1990, c. S.5, AS AMENDED (the OSA) AND IN THE MATTER OF ONTARIO SECURITIES COMMISSION RULE 91-502 TRADES IN RECOGNIZED OPTIONS (Rule 91-502) IN THE MATTER OF E D & F MAN CAPITAL MARKETS LIMITED AND E D & F MAN CAPITAL MARKETS INC.
RULING & EXEMPTION (Section 38 of the CFA and Section 6.1 of Rule 91-502)
UPON the application by E D & F Man Capital Markets Limited (MCML) and E D & F Man Capital Markets Inc. (MCM Inc) (collectively, the Applicants) to the Ontario Securities Commission (the Commission) for
(a) a ruling of the Commission, pursuant to Section 38 of the CFA, that the Applicants are not subject to the dealer registration requirements in the CFA (as defined below) or the trading restrictions in the CFA (as defined below) in connection with trades in Exchange-Traded Futures (as defined below) on Non-Canadian Exchanges (as defined below) where the Applicants are acting as principal or agent in such trades to, from or on behalf of Permitted Clients (as defined below) (the Dealer Registration Relief);
(b) a ruling of the Commission, pursuant to section 38 of the CFA, that a Permitted Client is not subject to the dealer registration requirements in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures on Non-Canadian Exchanges, where an Applicant acts in respect of the trades in Exchange-Traded Futures on behalf of the Permitted Client pursuant to the above ruling (the Client Registration Relief); and
(c) a decision of the Director, pursuant to section 6.1 of Rule 91-502, exempting the Applicants and their salespersons, directors, officers and employees (the Representatives) from section 3.1 of Rule 91-502 in connection with trades in Exchange-Traded Futures (collectively with the Dealer Registration Relief and the Client Registration Relief, the Requested Relief);
AND WHEREAS for the purposes of this ruling and exemption (collectively, the Decision):
(i)
"CEA" means the U.S. Commodity Exchange Act;
"CFTC" means the U.S. Commodity Futures Trading Commission;
"dealer registration requirements in the CFA" means the provisions of section 22 of the CFA that prohibit a person or company from trading in Exchange-Traded Futures unless the person or company satisfies the applicable provisions of section 22 of the CFA;
"EEA" means European Economic Area;
"EEA Member States" means Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the U.K.;
"Exchange Act" means the U.S. Securities Exchange Act of 1934;
"Exchange-Traded Futures" means a commodity futures contract or a commodity futures option that trades on one or more organized exchanges located outside of Canada and that is cleared through one or more clearing corporations located outside of Canada;
"FCA" means the U.K. Financial Conduct Authority;
"FCA Handbook" means the U.K. Financial Conduct Authority's Handbook of rules and guidance;
"FINRA" means the Financial Industry Regulatory Authority in the U.S.;
"Investment Firm" means an entity authorised and regulated in the EU in order to provide investment services;
"NFA" means the National Futures Association in the U.S.;
"NI 31-103" means National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations;
"Non-Canadian Exchanges" means exchanges located outside Canada;
"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;
"SEC" means the U.S. Securities and Exchange Commission;
"specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information;
"trading restrictions in the CFA" means the provisions of section 33 of the CFA that prohibit a person or company from trading in Exchange-Traded Futures unless the person or company satisfies the applicable provisions of section 33 of the CFA;
"U.K." means the United Kingdom of Great Britain and Northern Ireland;
"U.S." means the United States of America; and
(ii) terms used in this Decision that are defined in the OSA, and not otherwise defined in this Decision or in the CFA, have the same meaning as in the OSA, unless the context otherwise requires.
AND UPON considering the Application and the recommendation of staff of the Commission;
AND UPON the Applicants having represented to the Commission and the Director as follows:
1. MCML is a company incorporated under the laws of England and Wales. Its registered and head office is located at The News Building, 3 London Bridge Street, London, SE1 9SG, U.K.
2. MCML is not a reporting issuer in any jurisdiction of Canada.
3. MCML is a wholly-owned subsidiary of E D & F Man Holdings Ltd and provides execution and clearing services on derivatives exchanges located across the globe but primarily in the U.K., Europe, Asia and the United States.
4. MCML is authorized and regulated by the FCA to provide the following regulated products to eligible counterparties and professional clients:
(a) Certificates representing certain security
(b) Commodity Future
(c) Commodity option and option on commodity future
(d) Contract for Differences (excluding a spread bet and, a rolling spot forex contract and a binary bet)
(e) Debenture
(f) Emissions Allowance
(g) Future (excluding a commodity future and a rolling spot forex contract)
(h) Government and public security
(i) Option (excluding a commodity option and an option on a commodity future)
(j) Rights to or interests in investments (Contractually Based Investments)
(k) Rights to or interests in investments (Security)
(l) Rolling spot forex contract
(m) Share
(n) Spread Bet
(o) Unit
(p) Warrant
5. MCML is a member of major international securities and commodity futures exchanges and clearing houses, including Currenex MTF, DEFRA, Dubai Gold and Commodities Exchange, EEX, Eurex, Eurex Clearing, Euronext Derivatives, European Commodity Clearing AG (ECC), European Energy Exchange AG (EEX), ICE Clear Europe Limited, ICE Endex, ICE Futures Europe, LCH Clearnet SA, LCH Ltd, LME Clear Limited, London Metal Exchange and London Stock Exchange including Curve Global.
6. MCML has "passported" its U.K. registration into the EEA Member States. In relation to MCML's futures services, MCML utilizes its EEA passport to the extent that it may provide commodity futures services into other EEA Member States, and currently conducts such commodity futures activities out of its head office in London.
7. MCM Inc is incorporated under the laws of the state of New York in the U.S. Its head office is located at 140 East 45th Street, 10th Floor, New York, NY 10017, U.S.
8. MCM Inc is not a reporting issuer in any jurisdiction of Canada.
9. MCM Inc provides security brokerage services and is also an indirect wholly-owned subsidiary of E D & F Man Holdings Ltd.
10. MCM Inc is a member of major U.S. securities and commodity futures exchanges and clearing houses, including but not limited to the Chicago Board of Trade, Chicago Mercantile Exchange and the New York Mercantile Exchange.
11. MCM Inc is a broker-dealer registered with the SEC, a member of FINRA, a registered Futures Commission Merchant (FCM) with the CFTC and a member of the NFA.
12. MCM Inc is relying on the international dealer exemption in section 8.18 of NI 31-103 in British Columbia, Ontario, and Québec. MCM Inc is not registered pursuant to securities or commodity futures legislation in any jurisdiction of Canada.
13. The Applicants provide FCM services, which include commodity clearing and execution services, to various institutional customers.
14. The Applicants are not in default of securities legislation in any jurisdiction in Canada or under the CFA, subject to the matter to which this application relates. The Applicants are in compliance in all material respects with U.S. and U.K. securities and commodity futures laws, as applicable.
15. E D & F MAN Derivative Products Inc., an affiliate of the Applicants, is regulated by the CFTC and the NFA, and E D & F Man Capital Markets MENA Limited is regulated by the NFA.
16. Pursuant to its registrations and memberships, MCML is authorized to handle customer orders and receive and hold customer margin deposits, and otherwise act as an Investment Firm. The rules of the FCA require MCML to maintain adequate capital levels, make and keep specified types of records relating to customer accounts and transactions, and comply with other forms of customer protection rules, including rules respecting: know-your-customer obligations, account-opening requirements, anti-money laundering checks, trading limits, counterparty credit due diligence, delivery of confirmation statements, clearing deposits and initial and maintenance margins. These rules require MCML to treat Permitted Clients materially the same as its MCML'S U.S. and EEA customers with respect to transactions made on exchanges in the U.K. and EEA Member States. In order to protect customers in the event of the insolvency or financial instability of MCML, MCML complies with the Client Asset rules contained in the FCA Handbook, which ensure that cash balances are treated as client money and as such are segregated from MCML's own money. MCML does not accept securities from clients as collateral for the purposes of clearing financial derivatives. Where MCML accepts securities from clients, the securities would be treated as custody and as such, segregated and held separately from MCML's own securities.
In accordance with FCA rules, MCML treats affiliates as arm's length customers. Money belonging to customers that are affiliates is held alongside money belonging to non-affiliate customers. Affiliates' money is not held separately, but together within the client money pool.
Client money and securities are custodied exclusively with such banks, trust companies, clearing organizations or other licensed futures brokers and intermediaries as may be approved for such purposes.
FCA rules specifically require:
• any banks, trust companies or other licensed futures brokers and intermediaries to acknowledge that client money held is held on behalf of MCML's clients and cannot be set-off against any amount MCML may owe to the bank or Investment Firm;
• in the case of clearing organizations that are approved Central Counterparties (QCCPs), that MCML sends the QCCP such a statement, but the QCCP is not required to acknowledge the statement.
17. Pursuant to its registrations and memberships, MCM Inc is authorized to handle customer orders and receive and hold customer margin deposits, and otherwise act as a futures broker. In the U.S., Rules of the CFTC and NFA require MCM Inc to maintain adequate capital levels, make and keep specified types of records relating to customer accounts and transactions, and comply with other forms of customer protection rules, including rules respecting: know-your-customer obligations, account-opening requirements, suitability requirements, anti-money laundering checks, credit checks, delivery of confirmation statements, clearing deposits and initial and maintenance margins. These rules require MCM Inc to treat Permitted Clients materially the same as its U.S. customers with respect to transactions made on U.S. exchanges. With respect to transactions made on U.S. exchanges, in order to protect customers in the event of the insolvency or financial instability of MCM Inc, MCM Inc is required to ensure that customer securities and monies be separately accounted for, segregated at all times from their own securities and monies (including the securities and monies of their affiliates) and custodied exclusively with such banks, trust companies, clearing organizations or other licensed futures brokers and intermediaries as may be approved for such purposes under the CEA and the rules promulgated by the CFTC thereunder (each, a MCM Inc Approved Depository). MCM Inc is further required to obtain acknowledgements from any MCM Inc Approved Depository holding customer funds or securities related to U.S.-based transactions or accounts that such funds and securities are to be separately held on behalf of such customers, with no right of set-off against MCM Inc's obligations or debts.
18. Certain of the Permitted Clients of MCML have requested to trade in Exchange-Traded Futures through MCML and MCML has traded for such Permitted Clients in Exchange Traded Futures in the past, and wishes to continue to do so upon such Permitted Clients' request. For the period from October 2018 to September 2019, MCML has traded Exchange-Traded Futures for nine clients located in Ontario, three of which were give-up clients.
19. MCML has and wishes to continue to execute and clear trades in Exchange-Traded Futures on behalf of Permitted Clients in Ontario in the same manner that it executes and clears trades on behalf of its U.K. clients and EEA clients, all of which are "Eligible Counterparty" or "Professional Clients" as defined in the FCA Handbook. MCML will follow the same know-your-customer and segregation of assets procedures that it follows in respect of its U.K. clients and EEA clients. Permitted Clients will be afforded the benefits of compliance by MCML with the requirements of the FCA Handbook and the regulations thereunder. Permitted Clients in Ontario will have the same contractual rights against MCML as U.K. clients of MCML.
20. MCML is required under U.K. securities laws to categorize its clients using three categories (who are afforded a descending level of regulatory protection): (1) retail clients; (2) professional clients; and (3) eligible counterparties. Permitted Clients would generally fall into the categories of "professional clients" and "eligible counterparties". The levels of regulatory protection afforded to these categories of clients are substantially similar to those afforded to Permitted Clients. MCML is not permitted to provide investment services to clients that are categorized as retail clients.
21. Certain of the Permitted Clients of MCM Inc. have requested to trade in Exchange-Traded Futures through MCM Inc. and MCM Inc. has traded for such Permitted Clients in Exchange Traded Future in the past, and wishes to continue to do so upon such Permitted Clients' request. For the period from October 2018 to September 2019, MCM Inc. has traded Exchange-Traded Futures for nine clients located in Ontario, six of which were give-up clients.
22. MCM Inc has and wishes to continue to execute and clear trades in Exchange-Traded Futures on behalf of Permitted Clients in Ontario in the same manner that it executes and clears trades on behalf of its U.S. clients, all of which are "Eligible Contract Participants" as defined in the CEA. MCM Inc will follow the same know-your-customer and segregation of assets procedures that it follows in respect of its U.S. clients. Permitted Clients will be afforded the benefits of compliance by MCM Inc with the requirements of the CEA and the regulations thereunder, and the Exchange Act and the regulations thereunder. Permitted Clients in Ontario will have the same contractual rights against MCM Inc as U.S. clients of MCM Inc.
23. The Applicants will not maintain an office, sales force or physical place of business in Ontario.
24. The Applicants will solicit trades in Exchange-Traded Futures in Ontario only from persons who qualify as Permitted Clients.
25. Permitted Clients of the Applicants will only be offered the ability to effect trades in Exchange-Traded Futures on Non-Canadian Exchanges.
26. The Exchange-Traded Futures to be traded by Permitted Clients will include, but will not be limited to, Exchange-Traded Futures for equity index, single stock equity, interest rate, foreign exchange, bond, energy, environmental, agricultural and other commodity products.
27. Permitted Clients of the Applicants will be able to execute Exchange-Traded Futures orders through the Applicants by contacting the Applicant's relevant Account Executive.
28. The Applicants may execute a Permitted Client's order on the relevant Non-Canadian Exchange in accordance with the rules and customary practices of the exchange or engage another broker to assist in the execution of orders. The Applicants will remain responsible for all executions when the Applicants are listed as the executing broker of record on the relevant Non-Canadian Exchange.
29. The Applicants may perform both execution and clearing functions for trades in Exchange-Traded Futures or may direct that a trade executed by it be cleared through a carrying broker if the Applicants are not a clearing member of the Non-Canadian Exchange on which the trade is executed and cleared. Alternatively, the Permitted Client of the Applicants will be able to direct that trades executed by the Applicants be cleared through clearing brokers not affiliated with the Applicants in any way (each a Non-ED&F Clearing Broker).
30. If the Applicants perform only the execution of a Permitted Client's Exchange-Traded Futures order and "give-up" the transaction for clearance to a Non-ED&F Clearing Broker, such clearing broker will also be required to comply with the rules of the exchanges of which it is a member and any relevant regulatory requirements, including requirements under the CFA as applicable. Each such Non-ED&F Clearing Broker will represent to the Applicant, in an industry-standard give-up agreement, that it will perform its obligations in accordance with applicable laws, governmental, regulatory, self-regulatory, exchange and clearing house rules and the customs and usages of the exchange or clearing house on which the relevant Permitted Client's Exchange-Traded Futures order will be executed and cleared. The Applicants will not enter into a give-up agreement with any Non-ED&F Clearing Broker located in (i) the U.S. unless such clearing broker is registered with the CFTC and/or the SEC, as applicable, or (ii) the U.K. unless such clearing broker is authorized by the FCA, as required.
31. As is customary for all trades in Exchange-Traded Futures, a clearing corporation appointed by the exchange or clearing division of the exchange is substituted as a universal counterparty on all trades in Exchange-Traded Futures and Permitted Client orders that are submitted to the exchange in the name of the Non-ED&F Clearing Broker or the Applicants or, on exchanges where the Applicants are not members, in the name of another carrying broker. The Permitted Client of an Applicant is responsible to that Applicant for payment of daily mark-to-market variation margin and/or proper margin to carry open positions and the Applicant, the carrying broker or the Non-ED&F Clearing Broker is in turn responsible to the clearing corporation/division for payment. Note however, that where a Permitted Client of an Applicant is not also a member of the LME, a Client Contract subject to the Rules of the LME will come into effect between that Applicant and the Permitted Client.
32. Permitted Clients that direct the Applicants to give up transactions in Exchange-Traded Futures for clearance and settlement by Non-ED&F Clearing Brokers will execute the give-up agreements described above.
33. Permitted Clients will pay commissions for trades to the Applicants. In the event that a Permitted Client directs the Applicants to give-up a trade to Permitted Client's Non-ED&F Clearing Broker(s), the Permitted Client will be responsible for any fees levied by the Non-ED&F Clearing Broker. Where an Applicants itself directs Permitted Client's orders to, and utilizes the services of, a Non-ED&F Clearing Broker for clearing or execution at its own initiative, that Applicant will generally be responsible for any fees levied by the Non-ED&F Clearing Broker.
34. The trading restrictions in the CFA apply unless, among other things, an Exchange-Traded Future is traded on a recognized or registered commodity futures exchange and the form of the contract is approved by the Director. To date, no Non-Canadian Exchanges have been recognized or registered under the CFA.
35. If the Applicants were registered under the CFA as a "futures commission merchant", it could rely upon certain exemptions from the trading restrictions in the CFA to effect trades in Exchange-Traded Futures to be entered into on certain Non-Canadian Exchanges.
36. Section 3.1 of Rule 91-502 provides that no person shall trade as agent in, or give advice in respect of, a recognized option, as defined in section 1.1 of Rule 91-502, unless he or she has successfully completed the Canadian Options Course (which has been replaced by the Derivatives Fundamentals Course and the Options Licensing Course).
37. All Representatives of MCML who trade futures and options in the U.K. need to have attained and maintain a level of skills, knowledge and expertise to discharge their responsibilities in accordance with the FCA's Training and Competency Handbook. Ordinarily, Representatives who trade futures and options will have passed examinations in U.K. Financial Regulation and Securities and/or Derivatives administered by the Chartered Institute for Securities & Investment (CISI) under its Capital Markets Programme.
38. Under the U.K. Senior Managers & Certification Regime, these Representatives will be classified by MCML as certified individuals. Although these Representatives will not be subject to direct approval by the FCA, MCML must take reasonable care to ensure that a Representative does not perform a certification function without having first been certified as fit and proper to do so. This certification must be renewed on an annual basis.
39. All Representatives of MCM Inc who trade options in the U.S. have passed the National Commodity Futures Examination (Series 3), being the relevant futures and options proficiency examination administered by FINRA.
AND UPON the Commission and Director being satisfied that it would not be prejudicial to the public interest to grant the exemptions requested;
IT IS RULED, pursuant to section 38 of the CFA, that the Applicants are not subject to the dealer registration requirements set out in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures where the Applicants are acting as principal or agent in such trades to, from or on behalf of Permitted Clients provided that:
(a) each client effecting trades in Exchange-Traded Futures is a Permitted Client;
(b) any Non-ED&F Clearing Broker has represented and covenanted to the applicable Applicant that it is appropriately registered or exempt from registration under the CFA;
(c) the Applicants only execute and clear trades in Exchange-Traded Futures for Permitted Clients on Non-Canadian Exchanges;
(d) at the time trading activity is engaged in, the applicable Applicant:
(i) in the case of MCML,
(1) has its head office or principal place of business in the U.K.;
(2) is authorised and regulated by the FCA; and
(3) engages in the business of a futures commission merchant in Exchange-Traded Futures in the U.K.;
(ii) in the case of MCM Inc,
(1) has its head office or principal place of business in the U.S.;
(2) is registered as a FCM with the CFTC;
(3) is a member firm of the NFA; and
(4) engages in the business of a FCM in Exchange-Traded Futures in the U.S.;
(e) the applicable Applicant has provided to the Permitted Client the following disclosure in writing:
(i) a statement that the Applicant is not registered in Ontario to trade in Exchange-Traded Futures as principal or agent;
(ii) a statement that the Applicant's head office or principal place of business is located in London, U.K., in the case of MCML, or 140 East 45th Street, 10th Floor, New York, NY 10017, U..S, in the case of MCM Inc;
(iii) a statement that all or substantially all of the Applicant's assets may be situated outside of Canada;
(iv) a statement that 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;
(f) each of the Applicants has submitted to the Commission a completed Submission to Jurisdiction and Appointment of Agent for Service in the form attached as Appendix "A" hereto;
(g) MCML notifies the Commission of any regulatory action initiated after the date of this ruling in respect of MCML, or any predecessors or specified affiliates of MCML, by completing and filing with the Commission Appendix "B" hereto within ten days of the commencement of such action; provided that MCML may also satisfy this condition by filing with the Commission within ten days of the date of this Decision a notice making reference to and incorporating by reference the disclosure made relating to MCML pursuant to U.S. federal securities laws, and any updates to such disclosure that may be made from time to time, and by providing a copy, in a manner reasonably acceptable to the Director, of any Form BD "Regulatory Action Disclosure Reporting Page" relating to MCML;
(h) MCM Inc notifies the Commission of any regulatory action initiated after the date of this ruling in respect of MCM Inc, or any predecessors or specified affiliates of MCM Inc, by completing and filing with the Commission Appendix "B" hereto within ten days of the commencement of such action; provided that MCM Inc may also satisfy this condition by filing with the Commission within ten days of the date of this Decision a notice making reference to and incorporating by reference the disclosure made by MCM Inc pursuant to U.S. federal securities laws that is identified in the FINRA Broker Check system, and any updates to such disclosure as may be made from time to time, and by providing notification, in a manner reasonably acceptable to the Director, of any filing of a Form BD "Regulatory Action Disclosure Reporting Page";
(i) if the Applicants do not rely on the international dealer exemption by December 31st of each year, each of the Applicants 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 OSC Rule 13-502 Fees as if the Applicants relied on the international dealer exemption;
(j) by December 1st of each year, each Applicant notifies the Commission of its continued reliance on the exemption from the dealer registration requirement granted pursuant to this Decision by filing Form 13-502F4 Capital Markets Participation Fee Calculation; and
(k) this Decision will terminate on the earliest of:
(i) the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;
(ii) 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 dealer registration requirements in the CFA or the trading restrictions in the CFA; and
(iii) five years after the date of this Decision.
AND IT IS FURTHER RULED, pursuant to section 38 of the CFA, that a Permitted Client is not subject to the dealer registration requirement in the CFA or the trading restrictions in the CFA in connection with trades in Exchange-Traded Futures on Non-Canadian Exchanges where the Applicants act in connection with trades in Exchange-Traded Futures on behalf of the Permitted Clients pursuant to the above ruling.
Date: February 13, 2020
IT IS THE DECISION of the Director, pursuant to section 6.1 of Rule 91-502, that section 3.1 of Rule 91-502 does not apply to the Applicants or their Representatives in respect of trades in Exchange-Traded Futures, provided that:
(a) in the case of MCML, MCML and its Representatives maintain their respective authorizations and memberships with the FCA and the NFA which permit them to trade and clear commodity futures options in the U.K., and remain subject to regulation by the FCA; and
(b) in the case of MCM Inc, MCM Inc and its Representatives maintain their respective registrations and memberships with the CFTC and NFA which permit them to trade and clear commodity futures options in the U.S.; and
(c) this Decision will terminate on the earliest of:
i. the expiry of any transition period as may be provided by law, after the effective date of the repeal of the CFA;
ii. six months, or such other transition period as may be provided by law, after the coming into force of any amendments to Ontario commodity futures law (as defined in the CFA) or Ontario securities law (as defined in the OSA) that affects the dealer registration requirements in the CFA or the trading restrictions in the CFA; and
iii. five years after the date of this Decision.
Date: February 24, 2020
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
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;
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}
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
- - - - - - - - - - - - - - - - - - - -
Has any financial services regulator, securities or derivatives exchange, SRO or similar organization:
Yes
No
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?
_____
_____
Determined that the firm, or any predecessors or specified affiliates of the firm made a false statement or omission?
_____
_____
Issued a warning or requested an undertaking by the firm, or any predecessors or specified affiliates of the firm?
_____
_____
Suspended or terminated any registration, licensing or membership of the firm, or any predecessors or specified affiliates of the firm?
_____
_____
Imposed terms or conditions on any registration or membership of the firm, or predecessors or specified affiliates of the firm?
_____
_____
Conducted a proceeding or investigation involving the firm, or any predecessors or specified affiliates of the firm?
_____
_____
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
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).