The Securities Commission has granted an exemption to Friedberg Mercantile Group Ltd. (the Filer) from the prospectus requirement for the distribution of contracts for difference (CFDs) and over-the-counter (OTC) foreign exchange contracts to investors in applicable jurisdictions. The Filer, registered as an investment dealer in Canada and a member of the Investment Industry Regulatory Organization of Canada (IIROC), is permitted to continue offering CFDs under specific terms and conditions, including the use of a clear and plain language risk disclosure document instead of a prospectus.
The decision is based on the Filer’s compliance with IIROC rules and acceptable practices, including capital requirements and risk management strategies. The Filer’s online trading platform provides real-time client reporting and automated risk management systems to help manage the risks associated with leveraged products.
The granted relief is consistent with previous exemptions and with the guidelines set out in OSC Staff Notice 91-702. It is subject to conditions such as the Filer’s continued registration as an investment dealer, adherence to IIROC rules, and the provision of risk disclosure documents to clients. The exemption includes a four-year sunset clause and may be revoked under certain conditions, such as regulatory changes or disciplinary actions against the Filer.
The relevant laws and regulations underpinning the outcome include the Securities Act (Ontario), OSC Rule 91-502 Trades in Recognized Options, and the proposed but not adopted OSC Rule 91-504 OTC Derivatives. The decision also takes into account the regulatory framework of the Quebec Derivatives Act for offering similar products in Quebec.