Trading or advising in securities for a business purpose triggers the requirement to register as a dealer or adviser unless an exemption is available. Many of our readers are familiar with the concept of the “business trigger” for registration, which is described in the companion policy to NI 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103CP). To determine whether an entity or individual is in the business of trading or advising in securities, the regulators look at the type of activity and whether it is carried out for a business purpose. NI 31-103CP sets out a number of factors and examples that are relevant to the business trigger determination including:
- engaging in activities similar to a registrant;
- intermediating trades or acting as a market maker;
- directly or indirectly carrying on the activity with repetition, regularity or continuity;
- being, or expecting to be, remunerated or compensated; and
- directly or indirectly soliciting.
The factors set out in NI 31-103 CP are not an exhaustive list and do not automatically determine whether an individual or firm is in the business of trading or advising in securities. The particular circumstances must be considered. We remind firms and individuals who have been operating under the assumption that they do not trip the business trigger to be cognizant that as their business and capital raising activities evolve, the business trigger factors should be continuously reassessed to determine whether registration may be required. If you would like our assistance with conducting a “business trigger” analysis please contact a member of our team to discuss.
February 28, 2022