National Instrument 31-103

National Instrument 31-103
Name	National Instrument 31-103
Type	Securities regulation
Enacted	2009
Jurisdiction	Canada
Administered by	Canadian securities regulators

National Instrument 31-103

National Instrument 31-103 is a Canadian securities regulation instrument that prescribes registration, proficiency, conduct and organizational requirements for firms and individuals engaged in trading, advising and underwriting activities across provinces and territories; it consolidates prior rules and harmonizes standards formerly dispersed among regional regulators such as the Ontario Securities Commission, British Columbia Securities Commission, Alberta Securities Commission, Québec Autorité des marchés financiers, and Manitoba Securities Commission. The instrument interacts with statutes and authorities including the Securities Act (Ontario), the Canadian Securities Administrators, the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association of Canada, and the Department of Finance Canada while influencing market participants such as RBC Capital Markets, Scotiabank, TD Securities, BMO Nesbitt Burns, and CIBC World Markets.

Overview

National Instrument 31-103 establishes a unified framework for registration, ongoing obligations, standards of conduct, and capital and insurance requirements for dealers, advisers, and underwriters; it replaced a patchwork of provincial rules and aligned practices among entities including the Canadian Securities Administrators, the Ontario Securities Commission, the Alberta Securities Commission, the British Columbia Securities Commission, and the Québec Autorité des marchés financiers. The instrument sets out categories of registrants, proficiency standards linked to designations such as the Chartered Financial Analyst, the Canadian Securities Course credential holders, and compliance expectations paralleling guidance from the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada.

Scope and Applicability

The instrument applies to a wide range of market participants including investment dealers, portfolio managers, exempt market dealers, and adviser firms operating under the oversight of bodies such as the Ontario Securities Commission, the British Columbia Securities Commission, the Alberta Securities Commission, the Québec Autorité des marchés financiers, and the Nova Scotia Securities Commission. It interacts with other statutory regimes like the Securities Act (Ontario) and provincial equivalents, and affects institutions ranging from major banks such as Royal Bank of Canada and Bank of Montreal to boutique firms cited by the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada.

Registration and Exemptions

NI 31-103 defines registration categories, proficiency requirements, and exemptive relief mechanisms administered by provincial regulators including the Ontario Securities Commission, the Québec Autorité des marchés financiers, and the British Columbia Securities Commission. The instrument prescribes conditions for registration and recognizes exemptions often used by entities like RBC Capital Markets, Scotiabank, CIBC, TD Securities, and foreign firms coordinating with the Canadian Securities Administrators and the Department of Finance Canada.

Conduct and Compliance Requirements

The instrument mandates standards of conduct covering suitability, know-your-client procedures, and conflict of interest policies that align with guidance from the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association of Canada, and provincial commissions such as the Ontario Securities Commission and the Québec Autorité des marchés financiers. Firms and advisers, including representatives from RBC Dominion Securities, BMO Nesbitt Burns, and registered portfolio managers, must implement policies modeled on expectations articulated by the Canadian Securities Administrators and influenced by jurisprudence from courts like the Supreme Court of Canada.

Client Relationship and Disclosure Obligations

The instrument prescribes client relationship documentation, know-your-product and know-your-client obligations, and disclosure requirements for fees and conflicts that are enforced by authorities such as the Ontario Securities Commission, the Québec Autorité des marchés financiers, and the British Columbia Securities Commission. Registrants including retail firms, institutional advisers, and exempt market dealers are required to provide document sets similar to those used by firms like RBC Global Asset Management, TD Asset Management, Scotia Global Asset Management, and CIBC Asset Management.

Reporting, Record-Keeping, and Compliance Systems

NI 31-103 requires reporting, record retention, client account documentation, and the establishment of compliance systems and supervisory structures subject to review by bodies such as the Investment Industry Regulatory Organization of Canada, the Mutual Fund Dealers Association of Canada, the Ontario Securities Commission, and the Canadian Securities Administrators. Firms from major financial groups like Royal Bank of Canada, Bank of Montreal, Toronto-Dominion Bank, and independent advisers must maintain books and records and produce reports in formats consistent with expectations of the Office of the Superintendent of Financial Institutions and provincial securities commissions.

Enforcement, Amendments, and Regulatory Impact

Enforcement of the instrument is carried out by provincial regulators including the Ontario Securities Commission, the British Columbia Securities Commission, and the Québec Autorité des marchés financiers, often in coordination with self-regulatory organizations such as the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada. Amendments and policy changes have been proposed and implemented through consultations led by the Canadian Securities Administrators and influenced by submissions from major market participants like RBC Capital Markets, Scotiabank, TD Securities, and industry associations such as the Canadian Bankers Association and the Investment Funds Institute of Canada.

Category:Canadian securities law