The Securities Commission has issued a decision regarding an application by Jefferies International Limited, Jefferies Financial Services, Inc., and Jefferies Financial Products, LLC (collectively referred to as the Filers). The application sought to revoke a previous decision from July 28, 2017, which exempted the Filers from dealer registration and prospectus requirements for certain over-the-counter (OTC) derivatives trades with permitted counterparties, as defined in Section 1.1 of National Instrument 31-103.
The new decision maintains the same exemptions as the previous one but includes two key changes: it applies to the merged entity of two of the Filers (Jefferies Financial Services, Inc. and Jefferies Financial Products, LLC), and it extends the sunset date from July 28, 2021, to four years after the date of the new decision or until new legislation or rules specifically governing OTC derivatives transactions come into force, whichever is earlier.
The Filers are affiliated through their common parent, Jefferies Group LLC, and are involved in various financial services, including trading OTC derivatives. They are not registered in any capacity in Canada and do not maintain a physical presence there. The Filers are in compliance with the securities laws of their home jurisdictions and are not in default of any Canadian securities legislation.
The decision is based on the Filers’ representations, including their intention to trade OTC derivatives exclusively with permitted counterparties and not to offer or provide credit or margin for these transactions. The decision also considers the regulatory uncertainty and fragmentation in the regulation of OTC derivatives across Canada.
The decision is made under the authority of the Securities Act, R.S.O. 1990, c. S.5, as amended, and is contingent on the Filers meeting specific conditions, including trading only with permitted counterparties and not offering credit or margin. The decision also requires the Filers to maintain appropriate books and records and comply with any applicable trade reporting rules.
The principal regulator, the Ontario Securities Commission, has granted the requested relief, satisfied that it meets the legislative test, and has revoked the previous decision.