Securities

The securities division of The Manitoba Securities Commission protects investors and promotes fair and efficient capital markets throughout the province by conducting operations including registrations, processing of applications and prospectuses, preparing matters for the referral to the Commissioners and conducting investigations, prosecutions and other hearings.

Compliance is responsible for the direct oversight of firms and individuals registered in the categories of portfolio manager, investment fund manager, exempt market dealer and scholarship plan dealer.

The Manitoba Securities Commission (MSC) also registers firms and individuals as mutual fund dealers and investment dealers. These firms and individuals are members of the self-regulatory organization (SRO)— Canadian Investment Regulatory Organization (CIRO). They are subject to the compliance requirements of the SRO.

Compliance staff monitor firms and individuals for ongoing compliance with securities laws and regulations. They do this through activities such as:

  • conducting both full-scope and limited-scope reviews of firms
  • monitoring capital requirements
  • participating in “sweep reviews” of targeted areas of concern
  • providing guidance through staff notices and outreach

Firms are reviewed both within Manitoba and in coordination with securities regulators in other provinces and territories, which are all members of the Canadian Securities Administrators (CSA).

Ongoing Registrant Requirements

Registered firms have various ongoing requirements. The MSC conduct compliance reviews to monitor and assess whether firms are complying with the applicable requirements.

A registered firm is required to establish, maintain, and apply policies and procedures that establish a system of controls and supervision (a compliance system) that:

  • provides reasonable assurance that the firm and individuals acting on its behalf comply with securities legislation, and
  • manages the business risks in accordance with prudent business practices.

Each firm is responsible for determining the most appropriate compliance system for its operations. Firms must keep in mind both the specific legal requirements they must adhere to, and the principles-based obligations that guide the activities and operations of the firm and its related individuals.

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In addition to principles-based obligations, registered firms and individuals are governed by specific business conduct requirements contained in The Securities Act (Manitoba) and The Commodity Futures Act (Manitoba) and related rules and instruments.

Examples of key business conduct requirements for registered firms are know-your-client and suitability, know-your-product, marketing, relationship disclosure, policies and procedures, and complaint handling.

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Registered firms have ongoing financial requirements, including financial reporting, maintaining sufficient working capital, and having adequate insurance coverage.

Financial Reporting Requirements
Not more than 90 days after the end of its financial year, a registered firm must submit the following to the MSC:

  • audited annual financial statements for the financial year;
  • a completed Form 31-103F1 Calculation of Excess Working Capital for the end of the financial year and the immediately preceding financial year.

If the firm is registered as an investment fund manager or as an exempt market dealer in addition to another category, it must submit the following to the MSC not more than 30 days after the end of each financial quarter:

  • unaudited statement of financial position and statement of comprehensive income for the three-month period;
  • a completed Form 31-103F1 Calculation of Excess Working Capital, for the end of the financial quarter and the immediately preceding financial quarter.

If the firm is registered as an investment fund manager, it must submit a description of any net asset value (NAV) adjustments that occurred during the period.

All financial statements submitted by registered firms must be prepared in accordance with National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards.

CIRO member firms are exempt from the above financial filing requirements unless they are registered in multiple categories, in which case the financial reporting requirements noted above may apply.

Working Capital Requirements
Registered firms must calculate their excess working capital position using Form 31-103F1 Calculation of Excess Working Capital. Firms must ensure that their excess working capital is not less than zero for two consecutive days.

If a registered firm is capital deficient, the firm must notify the MSC as soon as possible and advise the manner in which the deficiency will be corrected.

Insurance and Bonding Requirements
All registered firms must maintain bonding or insurance that contains certain specific clauses and coverage. A firm must notify the MSC immediately if there are any changes to, claims made under, or cancellation of its bonding or insurance policy.

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Monthly Suppression of Terrorism & Canadian Sanctions Reporting Obligations
Registrants, exempt international dealers, and exempt international advisers have certain obligations under federal law to provide specified monthly reports relating to terrorist financing and United Nations Act sanctions on certain countries to the principal regulator or body that supervises or regulates the registrant or exempt international firm under provincial securities law.

Further information on these laws and reporting obligations can be found in CSA Staff Notice 31-352 Monthly Suppression of Terrorism and Canadian Sanctions Reporting Obligations.

Since federal reporting requirements may be added, modified, or repealed at any time, market participants should refer to the CSA Guide to Monthly Suppression of Terrorism and Canadian Sanctions Reporting. That guide includes a list of the current legislative provisions for federal reporting.

Self-Regulatory Organization Members
A firm registered as an investment dealer or a mutual fund dealer must be a member of a self-regulatory organization (SRO). SRO firms and dealing representatives are exempt from certain requirements because SROs have their own rules for these areas. These exemptions are detailed in NI 31-103.

Firms Registered in Multiple Categories
In general, a firm carrying on more than one type of activity that requires registration must register in each applicable category. The firm must comply with the requirements of all categories in which it is registered.

If a firm is registered in multiple categories, it must meet the most stringent requirements of its categories of registration. If the firm is a member of an SRO and is also registered in multiple categories, both SRO and MSC financial reporting requirements may apply. CIRO members should refer to the applicable SRO rules to determine the financial reporting requirements that apply to them.

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