Request for Comments –Proposed Amendments to Dealer Member Rule Section 6.6 and Corollary Amendments Relating to the Cross-Guarantee Requirement(the “Proposed Amendments”)
We understand that under the current requirements dealer members that are 20% commonly owned by another entity are required to guarantee each other’s obligations to clients, in part to ensure that investor protection is not compromised and that undue business risk is not shifted unnecessarily to the Canadian Investor Protection Fund. We agree with the position taken by many other industry members that commonly owned dealer members should be required to pay first when insolvency of one such dealer member occurs. However, we are not of the view that 50% voting interest/ ability to appoint board members is necessarily the correct threshold for determining common ownership for this purpose.
Overview of the Council’s Comments:
We thank you for the opportunity to provide these comments. We would be happy to address any questions you may have and appreciate the time you are taking to consider our points of view.