The Ontario Securities Commission (OSC) granted Fortrade Canada Limited (the Filer) an exemption from the prospectus requirement for distributing contracts for difference (CFDs) and over-the-counter (OTC) foreign exchange contracts to investors in certain Canadian jurisdictions. The Filer is registered as an investment dealer in Ontario and other provinces, and is a member of the Canadian Investment Regulatory Organization (CIRO). The decision is based on the Filer’s compliance with CIRO rules and acceptable practices, including providing a risk disclosure document similar to those required for recognized options and OTC derivatives.
Key Facts:
– The Filer is registered in multiple provinces and territories, excluding Quebec and Alberta.
– The Filer’s previous exemptive relief expired in February 2024, and the new relief extends it for up to four years.
– The Filer’s trading platform allows clients to trade CFDs on an execution-only basis, with real-time reporting and automated risk management.
– The Filer is the counterparty to its clients’ CFD trades and manages risk through back-to-back transactions with an affiliate.
– The Filer provides a risk disclosure document to clients before their first CFD transaction and obtains a written acknowledgment from them.
Key Conditions:
– The Filer must remain registered as an investment dealer and a CIRO member.
– All CFD transactions must comply with CIRO rules and acceptable practices.
– The Filer must provide the risk disclosure document to clients and deliver a copy to the OSC.
– The Filer must inform the OSC of any material changes or regulatory proceedings against it.
– The relief will expire in four years or upon the introduction of new legislation or rules regarding CFD distribution.
Relevant Laws and Regulations:
– Securities Act, R.S.O. 1990, c. S.5, ss. 53 and 74(1)
– OSC Rule 91-502 Trades in Recognized Options
– Proposed OSC Rule 91-504 OTC Derivatives (not adopted)
– National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations
– CIRO Rules and Acceptable Practices
Outcome:
The OSC granted the requested relief, allowing the Filer to continue offering CFDs under specified conditions for an interim period of up to four years.