OSC grants relief allowing international dealer to distribute CFDs via an IIROC member affiliate without filing prospectus
On October 16th, the Ontario Securities Commission (OSC) granted relief on an application by CMC Markets U.K. and its Canadian affiliate allowing CMC Canada to distribute contracts for difference and foreign exchange contracts (collectively, CFDs) to Ontario investors without having to file a prospectus. CFDs are derivative products that "allow clients to obtain exposure to markets and instruments that may not be available directly, or may not be available in a cost-effective manner."
In granting the relief, the OSC stated that the requested relief would "substantially harmonize the Commission's position on the offering of CFDs to investors in Ontario with how those products are offered to investors in Quebec" under the Derivatives Act (Quebec). Under the QDA, such products may be offered through the distribution of a standardized risk disclosure document rather than a prospectus. The OSC noted that it had previously recognized that similar disclosure may be better suited for such products than a prospectus.
Thus, the requested relief was granted provided that, among other things, CMC U.K. remains registered with the U.K. Financial Services Authority, CMC Canada maintains its registration as an investment dealer with the OSC and as a member of Investment Industry Regulatory Organization of Canada and all distributions are conducted pursuant to the rules of the QDA and the Autorité des marchés financiers.
The relief is valid for the earliest of four years, the suspension of the ability of the applicants to offer CFDs in the U.K. or Quebec and the coming into force in Ontario of legislation regarding the distribution of OTC derivatives.
