The Securities Commission has granted an exemption to a group of applicants, including Bank of Montreal and its various subsidiaries, from certain trading restrictions during the distribution of the Bank’s common shares. These restrictions are outlined in section 2.2(a) of OSC Rule 48-501, which generally prohibits issuer-restricted persons from bidding for or purchasing securities during specific periods related to distributions.
The applicants sought relief from these restrictions to allow for the continuation of regular investment and trading activities on behalf of their clients and managed accounts, including activities related to employee share ownership plans, dividend reinvestment plans, and normal course issuer bids, among others.
The Commission considered the application and representations made by the applicants, which included details about their regulatory status, business activities, and the nature of the transactions that would be affected by the trading restrictions. The applicants argued that the restrictions would prevent them from fulfilling fiduciary duties and conducting ordinary business activities, despite the shares in question being highly liquid securities.
The Director of Market Regulation, upon being satisfied that granting the exemptions would not be prejudicial to the public interest, decided to exempt the applicants from the trading restrictions during the issuer-restricted period for Canadian Offerings, provided that the shares continue to meet the liquidity requirements of the Rule. The exemption allows the applicants to engage in specific activities, including purchasing shares for managed accounts, facilitating employee plan transactions, providing custody services, and conducting normal course issuer bids, among others.
The decision also grants an exemption to restricted dealers associated with the applicants, allowing them to operate within the confines of the Universal Market Integrity Rules (UMIR) Trading Restrictions, provided the shares remain highly liquid.
The decision underscores the balance between maintaining market integrity and allowing for the practical execution of business activities by financial institutions and their subsidiaries.