Delayed implementation of certain Client Focused Reforms

On April 16, 2020, the Autorité des marchés financier (AMF), in tandem with the Canadian Securities Administrators (CSA), issued a temporary exemption This link will open in a new window (in french only) to postpone the implementation of the new conflict of interest rules stemming from the Client Focused Reforms (CFRs).

In light of the operational challenges associated with changes that registrants will be required to make to their relationship disclosure information pursuant to the CFRs, the CSA has decided to grant an exemption This link will open in a new window (in french only) that will postpone the effective date by which registrants will have to comply with the relationship disclosure information provisions to December 31, 2021, so the provisions come into effect at the time as the remaining reforms.

All remaining CFRs will take effect on December 31, 2021, consistent with the notice published on October 3, 2019 and the amending regulation

On March 23, 2020, the AMF, along with the CSA, issued a blanket order regarding an exemption from certain regulatory obligations of registrants in securities (Décision générale relative à une dispense de certaines des obligations réglementaires des personnes inscrites en valeurs mobilières et en dérivés) (2020-PDG-0022 (pdf - 53 KB)This link will open in a new windowUpdated on March 23, 2020Dispense de certaines des obligations réglementaires des personnes inscrites en valeurs mobilières et en dérivés (COVID-19).) (the Blanket Order grants a 45-day deadline extension for certain filing requirements set out in Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations). The underlying requirements will remain in effect for the duration of this exemption.

What are my capital and calculation of excess working capital obligations (all registered firms)?

You are exempt from the deadlines for certain calculation of working capital filing obligations (refer to the decision for all the details).

However, you must continue to perform such calculations with sufficient frequency and know what your excess working capital situation is at all times, in accordance with section 12.1 of Regulation 31-103.

If the excess working capital is less than zero, you must notify the AMF as soon as possible at [email protected]. The excess of working capital cannot be less than zero for more than two consecutive days. You can also refer to CSA Staff Notice 31-350 Guidance on Small Firms Compliance and Regulatory Obligations  (Notice 31-350 (pdf - 85 KB)This link will open in a new windowUpdated on May 18, 2017Small Firms Compliance and Regulatory Obligations) for more guidance on the treatment of excess of working capital calculations.

What are my obligations as an investment fund manager with respect to net asset value calculations?

Under the blanket order, you are temporarily exempt from the deadlines for certain filing requirements for the calculation of net asset values (refer to the decision for all the details).

However, you must continue to maintain and comply with appropriate written policies and procedures for determining the fair value of investment fund assets and liabilities. You are also required to maintain a record of the determination of fair values and the reasons supporting that determination (section 14.2 of Regulation 81-106 respecting Investment Fund Continuous Disclosure(pdf - 1 MB)This link will open in a new windowUpdated on December 21, 2018Investment fund continuous disclosure).

What should I do if I recently received a disclosure reminder letter regarding one of the documents specified in the exemption?

You may disregard the reminder letter, as it was automatically sent to you prior to the date of publication of the 2020-PDG-0022 exemption.

The AMF encourages you to be transparent and proactive in your communications with clients, key staff, regulators and service providers. We remind you that technology-based tools may be used to communicate with clients.

Clients must be able to continue to contact their registered representatives, have access to their assets and funds, and obtain trade order confirmations, statements and other information pertaining to their accounts. Clients must also be notified as soon as possible if alternative document access and delivery methods are instituted (telephone, platform or e-mail) because of the COVID-19 pandemic.

The various documents to be delivered to clients under Part 14 of Regulation 31-103 may be delivered electronically if the client expressly consents to it. Please see the following guidance:

• Policy Statement 11-201 respecting Electronic Delivery of Documents(pdf - 236 KB)This link will open in a new windowUpdated on July 24, 2020
• Info-Conformité, volume 1, numéro 2: Comment procéder à la transmission électronique des relevés de compte dans votre entreprise (electronic delivery of account statements)

You should take reasonable steps to ensure that client information is protected when such alternative methods are used.

Postal and courier services are still available during the pandemic. You must treat all clients equally, whichever means of correspondence they choose. Doing so is in keeping with your obligation to deal fairly, honestly and in good faith with your clients. We expect firms’ establishments to continue to receive and process mail, or use a forwarding procedure, while complying with public health directives.

The Civil Code of Québec defines a signature as “the affixing by a person, to a writing, of his name or a mark distinctive to him which he regularly uses to signify his consent.” In other words, a signature is used to identify the signatory and indicate the expression of his or her will. The client’s signature may therefore be required when the client enters into a service agreement or as a control measure, for example, when obtaining confirmation that the information he or she has provided is accurate.

While a variety of procedures or technological means may be used in carrying out your activities, you must make certain that you comply with the applicable regulatory requirements.

You must also consider other laws that are not administered by the AMF, including:

• the Act to establish a legal framework for information technology (Québec)This link will open in a new window which addresses the equivalence and legal value of technology-based documents and maintenance of the integrity of documents;
• the Act respecting the protection of personal information in the private sector (Québec)This link will open in a new window sets out requirements for the collection, use, communication and retention of personal information;
• la Personal Information Protection and Electronic Documents Act (Canada)This link will open in a new window,  which pertains to certain organizations that collect, use or disclose personal information.

You must continue to maintain records to accurately record your business activities, financial affairs and client transactions and demonstrate the extent of your compliance with applicable requirements under securities legislation (s. 11.5 of Regulation 31-103).

As pointed out in Policy Statement to Regulation 31-103, the AMF expects you to maintain notes of communications that could have an impact on the client’s account (purchase or sale of securities, for example) or the client’s relationship with you. These communications include:

• oral communications;
• all e-mail, regular mail, fax and other written communications.

The AMF does not expect registrants to record all telephone conversation with clients.Registrants who are approved participants of the Montréal Exchange should refer to Additional Guidance for Approved Participants – COVID-19 (March 18, 2020) This link will open in a new window.

The AMF has decided to limit in-person inspections, oversight and investigative activities and adapt them, as needed, to the realities of the entities or individuals concerned. For example, travel by our inspectors and investigators has been suspended and is being discussed with all entities or individuals for which an inspection or work is in progress, so adjustments can be made based on a case-by-case-basis. The AMF is continuing its inspection, supervision and investigation activities, but remotely and in a more targeted manner. This approach is already in use under normal circumstances for some of our work.

For upcoming on-site inspections and investigations, if the current situation continues, the inspectors and investigators will contact the entities and individuals involved directly in the next few weeks to discuss how to perform the work remotely while respecting everyone’s constraints. The AMF will continue to apply a risk-based approach in prioritizing its inspection and supervisory activities. It will show flexibility and take the current exceptional circumstances into consideration. As for investigations, except for on-site activities, work is proceeding as usual.

Can inspectors be reached to answer our questions?

Yes. You can leave a message with an inspector. The message will be transferred directly to the voicemail of the inspector, who will then be able to call you back. You can also write directly to the inspectors with whom you have already had discussions concerning your file.

I have questions relating to a past or upcoming inspection. Whom can I contact?

You can call the inspector on the file or e-mail him or her at the postal or e-mail address indicated in your inspection notice.

To enable registrants and reporting issuers to focus on their main activities, the CSA is extending the comment periods for all regulatory proposals currently out for comment by 45 days. In addition, no new proposals for comment will be published until at least May 30, 2020.

The AMF is keeping a close eye on market developments. With the current situation resulting in an increased risk of fraud and market abuse, the AMF continues to use all of its monitoring and investigative tools and will be able to intervene to protect potential victims in cases of fraud or when an offence is committed under the laws administered by it.