NI 31-103 Amendments – Client Relationship Model Phase 2 (CRM2)

The OSC recently issued an e-mail blast to registrants advising them of certain CSA relief expected from the CRM2 requirements coming into effect later this year and in 2016.  The OSC advised firms that permanent relief from certain CRM2 requirements is expected to be formally published by the CSA later this month.  IIROC and the MFDA will each amend their rules to align with the CSA relief.

The relief is expected to include the following:

1. The CSA has agreed to provide for a six month extension to the CRM2 requirements scheduled to come into force on July 15, 2015, specifically the new requirements for account statements, security holder statements, additional statements, scholarship plan dealer statements, market value and position cost.  These requirements will now come into force at the end of the year, i.e. December 31, 2015.
2. In cases where investments are transferred from another registrant, firms may include the market value of the security versus the cost of the security position in clients’ account statements; there will be no need to disclose that the market value applies to the date the investments were transferred.
3. The new requirements under sections 14.17 Report on charges and other compensation and 14.18 Investment performance report of NI 31-103 will not be delayed and will come into force on July 15, 2016 as planned, however, firms reporting performance on a calendar year basis will have a six month extension as it relates to including market value and annualized total percentage return information in clients’ account statements:
   • Market Value Information – firms will be able to base their first investment performance reports solely on market value information from 2016, rather than including comparative data from 2015.  The first report will cover the period from January 1, 2016 to December 31, 2016.
   • Annualized Total Percentage Return Information – firms will be reporting on the 2016 calendar year only, rather than since inception or for the period since July 15, 2015.

Please do not hesitate to contact Garth Foster or Donna Leitch if you have any questions.