The new Multilateral Instrument 93-101 Derivatives: Business Conduct (MI 93-101) and its related companion policy come into force shortly on September 28, 2024. MI 93-101 will have a direct impact on firms that advise or deal in over-the-counter derivatives (OTC derivatives), as described in our prior article. Subject to ministerial approval in British Columbia, MI 93-101 will become a national instrument.
In our prior article, we addressed questions such as:
- Does the rule apply to you if you are a registered securities adviser or dealer?
- Does the rule apply to you if you are a foreign adviser or sub-adviser?
- When you are advising a client, can the client waive some investor protections?
- When do you need to repaper client contracts and relationship documentation so that you can rely on the Eligible Derivatives Party waivers?
- What is the impact on your compliance program?
Of note, MI 93-101 also impacts firms with funds or managed accounts that utilize the services of an international adviser or sub-adviser that provide advice on OTC derivatives.
Foreign advisers that currently rely on the international adviser or international sub-adviser exemption in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31-103) will be required to comply with the new, corresponding registration exemptions under MI 93-101 to advise on OTC derivatives. Such advisers will, among other things, need to review their policies and procedures to ensure compliance. Foreign advisers (not sub-advisers) will also be required to file a new form, Form 93-101F1 Submission to Jurisdiction and Appointment of Agent for Service of Process with its principal regulator before the effective date of the rule to rely on the exemption under section 46 of MI 93-101. The same form must be filed by a foreign derivatives dealer to rely on the exemption in section 39 of MI 93-101.
If your firm relies on the services of a foreign derivatives dealer or foreign derivatives adviser, you should confirm that they have filed the necessary forms and otherwise complied with any applicable obligations under MI 93-101 by the deadline.
For additional information on the obligations for all derivatives firms that advise in or trade OTC derivatives and exemptions from certain obligations, please see this article published last year by our colleagues at BLG LLP. Some additional exemptions have since been made available in Coordinated Blanket Order 93-930, described here.
August 30, 2024