The Ontario Securities Commission has approved proposed by-law no. 39 of the Investment Dealers Association of Canada, Principal and Agent, which allows firms to organize themselves in principal and agent business models, subject to two conditions.
The by-law will allow IDA members and their salespersons to organize themselves in a principal and agent relationship, rather than the employer/employee sort of relationship that has been required. However, the P&A model has the same legal and functional effect of an employee model for the purposes of client protection.
The conditions of approval are:
- the by-law will become effective only after the Universal Market Integrity Rules have been amended to ensure all requirements that are currently applicable to salespersons who are employees will also apply to salespersons who are non-employee agents; and
- the IDA will monitor any compliance issues arising from the principal/agent relationship and report to staff of the Alberta Securities Commission, the B.C. Securities Commission, the OSC and the Saskatchewan Securities Commission, one year after the effective date of the by-law, the nature and the frequency of any compliance issues.
A copy and description of the by-law were published on November 9, 2001. No comments were received. Still, it was revised to clarify the requirements on IDA members and their salespersons who would like to enter into non-employer/employee principal/agent relationships.
In addition, the Saskatchewan Securities Commission approved, the Alberta Securities Commission did not disapprove and the British Columbia Securities Commission did not object to the proposed by-law subject to the same conditions.