17.6.1 Registration Requirements For Mutual Fund Industry

Registration Requirements For The Mutual Fund Industry

Mutual fund managers, distributors, and sales representatives must be registered with the securities administrators in all provinces in which they operate. The relevant securities commissions insist that they be informed within five business days of any important change in personal circumstances, such as a change of address or a bankruptcy.

Education Qualifications

Mutual fund sales representatives must have successfully passed a mutual fund course such as:

• The Canadian Securities Institute’s Canadian Securities Course
• The Investment Funds in Canada course
• Or another qualifying education program

Registration Requirements

An application for registration must be filed electronically with the National Registration Database (NRD) using Form NRD 33-109F4, along with the appropriate fee. Provincial securities acts set the initial and continuing registration requirements. In Quebec, the representative must register with the Autorité des marchés financiers (AMF).

To work as a mutual fund sales representative, one must also meet the following requirements:

• Employment: Generally, you must be employed by the distribution company.
• Dual Employment: You are not permitted to carry on other forms of employment without the prior approval of the appropriate securities administrators and any industry associations of which your firm is a member. However, many provinces permit persons to be dually registered as mutual fund representatives and life agents.
• Background Check: You must complete a detailed report about your past businesses, employment, and conduct, and submit it for a police review.

Detailed Report Essentials

The report must include the following information:

• Any companies with which you have been associated in certain capacities.
• Any action against you regarding any government license to deal in securities.
• Any action against you regarding any government license to deal with the public in any other capacity requiring registration.
• Any disciplinary action regarding an approval by any securities commission or similar professional body.
• Any past criminal convictions or current charges or indictments.
• Any bankruptcies or proposals to creditors.
• Any civil judgments or garnishments.

Notice of Changes

As a mutual fund representative, you must notify the provincial securities administrator within five business days (or 10 days in Quebec) of any of the following changes in your provincial application:

• Change of address.
• Disciplinary action of a professional body.
• Personal bankruptcy (Ontario and Quebec).
• Criminal charges or civil judgments.

Transfer of Registration

As soon as a mutual fund sales representative ceases to work for a registered dealer, registration is automatically suspended. The employer must notify the provincial securities administrator of the termination of employment and, in most provinces, the reason for termination.

Before a representative’s registration can be reinstated, notice in writing must be received by the securities administrator from another registered dealer stating the employment of the representative by that other dealer. The reinstatement of the registration must be approved by the securities administrator.

If the securities administrator does not receive a request for reinstatement and transfer to a new company within the permitted period, the registration lapses and the representative must reapply for registration. The permitted period is 30 days in most provinces and six months in Quebec.

Key Takeaways

• Compliance: Ensuring compliance with registration requirements is critical for mutual fund managers, distributors, and sales representatives.
• Continuous Updates: It is important to promptly update the securities administrators about significant changes in personal or professional status.
• Reinstatement: Quick action is required for the transfer of registration to prevent reapplication hassles.

Frequently Asked Questions (FAQs)

What are the key educational qualifications required to become a mutual fund sales representative?

The primary qualifications include passing a mutual fund course such as:

• The Canadian Securities Institute’s Canadian Securities Course.
• The Investment Funds in Canada course.
• Another qualifying education program approved by securities regulators.

How soon must I report a change of address?

Changes of address must be reported within five business days (or 10 days if in Quebec).

Can I work another job while being registered as a mutual fund sales representative?

Generally, other forms of employment are not permitted without prior approval from the appropriate securities administrators and any relevant industry associations. However, dual registration as a mutual fund representative and life agent is allowed in many provinces.

What happens if my employment with a registered dealer ends?

The registration is automatically suspended. The termination must be reported to the provincial securities administrator, and a new registration must be applied for if a new employer is found within the allowed period, or the registration lapses.

Glossary

• Mutual Fund: A type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities.
• National Registration Database (NRD): An online registration database used by dealers, underwriters, and advisers.
• Autorité des marchés financiers (AMF): The body mandated by the government of Quebec that regulates financial markets.

Charts

Process of Registration and Notification of Changes

    flowchart TD
	    A[Registration Application
	e.g., Form NRD 33-109F4] -->|Submit with Fee| B(Securities Administrator)
	    B --> C(Background Check & Further Evaluation)
	    C -->|Approved| D(Employment Begins)
	    D --> E(Maintain Compliance)
	    E --> F(Update Any Changes in Status[lapse period]
	-Address
	-Disciplinary action)

Process of Registration Transfer

    flowchart LR
	    X[Termination of Employment] -->|Notify Administrator| Y[Registration Suspended]
	    Y --> Z{Transfer Requested
	Written Notice 
	from New Employer}
	    Z -->|Approved| A1[Activity Resumes]
	    Z -->|Not Received
	within Permitted Period| B1[Reapply for Registration]

This structured guide aims to help candidates moDirectresources relevantlyilate to pass the Canadian Securities Course certification exam efficiently.