SSgA Funds Management, Inc. -- s. 80 of the CFA
Headnote
Section 80 of the Commodity Futures Act (Ontario) -- Foreign adviser exempted from the adviser registration requirement in section 22(1)(b) of the CFA where such adviser acts as an adviser in respect of commodity futures contracts or commodity futures options (commodities) for certain individual and institutional investors in Ontario who meet the definition of "permitted client" in NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Commodities are primarily traded on commodity futures exchanges outside of Canada and primarily cleared outside of Canada.
Terms and conditions on exemption correspond to the relevant terms and conditions on the comparable exemption from the adviser registration requirement available to international advisers in respect of securities set out in section 8.26 of NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations -- Exemption also subject to a "sunset clause" condition.
Statutes Cited
Securities Act, R.S.O. 1990, c. S.5, as am.
Commodity Futures Act, R.S.O. 1990, c. C.20. as am., ss. 1(1), 22(1)(b), 80.
Instruments Cited
National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, ss. 1.1, 8.26.
IN THE MATTER OF
THE COMMODITY FUTURES ACT,
R.S.O. 1990, CHAPTER C.20, AS AMENDED
(the CFA)
AND
IN THE MATTER OF
SSgA FUNDS MANAGEMENT, INC.
ORDER
(Section 80 of the CFA)
UPON the application (the Application) of SSgA Funds Management, Inc. (the Filer) to the Ontario Securities Commission (the Commission) for an order pursuant to section 80 of the CFA that the Filer and any individuals engaging, in or holding themselves out as engaging in, the business of advising others on the Filer's behalf (the Representatives) be exempt, for a period of five years, from the adviser registration requirements 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 requirement in the CFA that prohibits a person or company from acting as an adviser unless the person or company is registered in the appropriate category of registration under the CFA;
CFTC means the United States Commodity Futures Trading Commission;
Contract has the meaning ascribed to that term in subsection 1(1) of the CFA;
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;
OSA means the Securities Act (Ontario), as amended;
"OSA Adviser Registration Requirement" means the requirement in the OSA that prohibits a person or company from acting as an adviser 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 the Order such definition shall exclude a person or company registered under the securities or commodities legislation of a jurisdiction of Canada as an adviser or dealer;
SEC means the United States Securities and Exchange Commission;
"specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information; and
U.S. Advisers Act means the United States Investment Advisers Act of 1940.
AND UPON the Filer having represented to the Commission that
1. The Filer is a Massachusetts corporation with its head office in Boston, Massachusetts, U.S.A.; the Filer is a wholly owned subsidiary of State Street Corporation.
2. The Filer is registered as an Investment Adviser under the U.S Advisers Act and with the CFTC as a Commodity Trading Adviser and provides trading advice services in respect of futures, options on futures and swaps to its clients generally traded on a U.S. Exchange and/or with a U.S. counterparty to certain of its clients.
3. The Filer is not registered in any capacity under the CFA.
4. State Street Global Advisors, Ltd. (SSGA) is a corporation incorporated under the federal laws of Canada with its head office located in Montreal, Quebec. SSGA is a wholly owned subsidiary of State Street Corporation.
5. SSGA is registered as an adviser under the OSA, and as a portfolio manager and exempt market dealer in all provinces and territories of Canada. SSGA is also registered as an investment fund manager in Quebec, Ontario and Newfoundland, and as a commodity trading counsel and manager under the CFA and as an adviser under the Commodity Futures Act (Manitoba).
6. SSGA enters into investment management agreements with clients and also is the manager of the SSGA pooled funds, which are used for both managed accounts and accredited investors.
7. State Street Bank and Trust Company (SSBTC), an affiliate of the Filer, is a bank regulated in the conduct of its investment advisory business by the U.S. Federal Reserve Board and the Commonwealth of Massachusetts Commissioner of Banks and is a bank within the meaning of the U.S. Advisers Act. As such, it is not subject to the U.S. Advisers Act as the definition of an 'Investment Adviser" under that Act, excludes "a bank, or any bank holding company as defined in the Bank Holding Act of 1956". Its head office is in Boston, Massachusetts, U.S.A.
8. SSBTC historically provided asset management services to certain institutional clients in both the U.S. and abroad. Following passage into law on July 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a decision was made to register the Filer as a commodity trading adviser with the U.S. Commodity Futures Trading Commission and delegate all advice regarding futures, options on futures and swaps (as defined in the United States) from SSBTC to the Filer. The personnel providing the advice did not change as a result of the regulatory administrative decision to register the Filer and delegate the advice. The personnel at SSBTC who provide advice relating to securities are the same as those at the Filer who provide commodity trading advisory services.
9. SSBTC offers its advisory services to clients in a broad array of fixed income, equity and other investment strategies.
10. Certain SSBTC clients may desire commodity trading advice in connection with their overall strategy. To that end, SSBTC delegates to the Filer all discretionary commodity trading advice, with all ancillary permissions and authorities necessary for the Filer to carry out such activities.
11. SSBTC is not registered in Canada as an adviser with any securities regulatory authority. In all provinces, SSBTC can only provide advice to Permitted Clients in respect of foreign securities in reliance on the International Adviser Exemption, except in Ontario it is also permitted to provide advice through its Canadian branch to Ontario clients, in which case it can rely on the section 35.1 of the Securities Act (Ontario) exemption from registration as an adviser available for Schedule III banks, although it has no current intention to do so.
12. In addition to SSBTC providing advice in respect of securities, the Filer proposes to act as an adviser to Permitted Clients in Ontario in respect of commodity futures contracts and/or commodity futures options traded primarily on one or more organized exchanges located outside of Canada and primarily cleared through one or more clearing corporations that are located outside of Canada (collectively, the Foreign Contracts) in connection principally with respect to foreign futures, and options on futures. It will provide its advice on a fully discretionary basis.
13. 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, the Filer would be required to satisfy the CFA Adviser Registration Requirement and would have to apply for, and obtain, registration in Ontario as an adviser under the CFA in the category of commodity trading manager.
14. To the best of the Filer's knowledge, the Filer confirms that there are currently no regulatory actions of the type contemplated by the Notice of Regulatory Action attached as Appendix "B", except as otherwise disclosed to the Commission, in respect of the Filer or any predecessors or specified affiliates of the Filer.
AND UPON being satisfied that it would not be prejudicial to the public interest for the Commission to grant the exemption requested on the basis of the terms and conditions proposed,
IT IS ORDERED pursuant to section 80 of the CFA that the Filer and its Representatives are exempt, for a period of five years, from the adviser registration requirements of paragraph 22(1)(b) of the CFA in respect of providing advice to Permitted Clients as to the trading of Foreign Contracts provided that:
(a) the Filer 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 Filer's head office or principal place of business remains in the United States;
(c) the Filer is registered or operates under an exemption from registration, under the applicable securities or commodity futures legislation in the United States in a category of registration that permits it to carry on the activities in the United States that registration as an adviser in the category of commodity trading manager would permit it to carry on in Ontario;
(d) the Filer continues to engage in the business of an adviser, as defined in the CFA, in the United States;
(e) as at the end of the Filer's most recently completed financial year, not more than 10% of the aggregate consolidated gross revenue of the Filer, its affiliates and its affiliated partnerships is derived from the portfolio management activities of the Filer, its affiliates and its affiliated partnerships in Canada (which, for greater certainty, includes both securities-related and commodity future-related activities);
(f) before advising a Permitted Client with respect to Foreign Contracts, the Filer notifies the Permitted Client of all of the following:
(i) the Filer is not registered in the local jurisdiction to provide the advice described under paragraph (a) of this Order;
(ii) the foreign jurisdiction in which the Filer's head office or principal place of business is located;
(iii) all or substantially all of the Filer's assets may be situated outside of Canada;
(iv) there may be difficulty enforcing legal rights against the Filer because of the above;
(v) the name and address of the Filer's agent for service of process in Ontario;
(g) the Filer 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 Filer notifies the Commission of any regulatory action initiated after the date of this Order with respect to the Filer or any predecessors or specified affiliates of the Filer, by completing and filing Appendix "B" within 10 days of the commencement of such action, provided that this condition shall not be required to be satisfied for so long as SSGA remains a registered firm in good standing under Ontario securities laws;
(i) by December 1 of each year, the Filer notifies the Commission if it is relying on the exemption from registration granted pursuant to this order; and
(j) the Filer complies with the filing and fee payment requirements applicable to an unregistered exempt international firm under Ontario Securities Commission Rule 13-502 Fees.
Dated this 18th of June, 2013.
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; and
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.
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 is to be submitted to the following address:
Ontario Securities Commission20 Queen Street West, 22nd Floor,Toronto, ON M5H 3S8Attention: Senior Registration Supervisor, Portfolio Manager TeamTelephone: (416) 593-8164email: [email protected]
APPENDIX B
NOTICE OF REGULATORY ACTION
1. Has the firm, or any predecessors or specified affiliates{1} 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:
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 thefirm, or predecessors or specified affiliates of the firm?
_____
_____
(f) Conducted a proceeding or investigation involving the firm, or anypredecessors or specified affiliates of the firm?
_____
_____
(g) Issued an order (other than en 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 to the following address:
Ontario Securities Commission20 Queen Street West, 22nd FloorToronto, ON M5H 3S8Attention: Senior Registration Supervisor, Portfolio Manager TeamTelephone: (416) 593-8164email: [email protected]
{1} In this Appendix, the term "specified affiliate" has the meaning ascribed to that term in Form 33-109F6 to National Instrument 33-109 Registration Information.