Toronto-based Northern Securities Inc. (NSI) is alerting clients to its efforts to replace its carrying broker, Penson Financial Canada, by the end of the year.
On Monday, staff of the Investment Industry Regulatory Organization of Canada (IIROC) indicated that they were seeking an expedited hearing to require NSI to notify clients about restrictions they may face due to the termination of its carrying broker agreement (as Penson plans to terminate its main business operations on December 31). IIROC is also seeking to suspend the firm if it cannot secure a new carrying broker arrangement.
NSI said Tuesday that it is continuing to seek alternative arrangements in order to replace Penson as its carrying broker, and that it has been in “active discussions” with a number of other carrying brokers and self-clearing firms that could provide it with clearing, settlement, and custodian services.
The firm says that IIROC’s application requests that, as a condition of NSI’s continued membership, the firm provide written notice to its clients by December 17 that client accounts will be restricted to sales or transfer-outs as of December 31 (unless extended by Penson Financial); that clients have the right to transfer their accounts to another dealer; and, that clients should notify Penson of any transfer by Dec. 31 to avoid the application of these restrictions.
NSI says it confirmed to its counsel that it is sending out such a letter to clients, and that its counsel has informed IIROC of the proposed mailing. It has also posted the letter on its website.
NSI says that it “continues to act cooperatively with Penson to secure an alternative arrangement that is satisfactory to Penson and IIROC.” And, it says that, if an alternative arrangement is secured, NSI will seek an extension of the termination date in order for the alternative arrangement to be implemented. In the letter posted on its website, NSI says that Penson has indicated that it may be prepared to extend the deadline to permit an alternative arrangement to be finalized.
“However, there is no certainty that Northern will be able to make satisfactory alternative arrangements with these other service providers, or certainty as to an agreed upon extension of the termination date with Penson,” it cautions.
NSI is a subsidiary of Toronto-based Northern Financial Inc. (TSXV:NFC).