The Mutual Fund Dealers Association of Canada is proposing amendments to its capital rules to bring them in line with requirements imposed by provincial registration rules.

Friday’s OSC Bulletin includes proposed amendments to the current minimum capital requirements set out in the MFDA rules because they are not consistent with the requirements imposed under the registration reform rules for fund dealers that are licensed in multiple categories.

Currently, Level 1 fund dealers are subject to a $25,000 minimum capital requirement, while $50,000 is required for Level 2 dealers, and $75,000 is required for Level 3 dealers. Under the registration reform rules, the minimum capital requirement for a registered dealer that is not registered as an investment fund manager is $50,000, and the minimum requirement for an investment fund manager is $100,000.

The proposed changes aim to harmonize the requirements. In particular, the rules would be amended to prohibit a Level 1 dealer from being registered in any category of registration other than mutual fund dealer. And, it would require firms registered as Level 2 or 3 Dealers, and also registered as investment fund managers, to maintain a minimum capital of $100,000. No changes are being proposed to the minimum capital requirements for Level 4 dealers.

The MFDA says that the proposed changes will not have a significant impact on members. There are not currently any Level 1 dealers, and very few Level 2 and 3 dealers who are also investment fund managers (and those firms have sufficient capital to meet the proposed $100,000 amount, it says).

Comments on the proposed changes are due by October 12.

IE