1. What are the costs of becoming an MFDA Member?
There are different types of costs associated with MFDA Membership. They include the following:
- Membership Application Deposit
- Membership Fees
- Minimum Capital
- Audit Fees
- MFDA Investor Protection Corporation Fees
- General Operating Expenses
A non-refundable application deposit must accompany the completed application for any company seeking membership in the MFDA. The deposit will be credited against the Member’s annual membership fees. The amount of the non-refundable deposit to be submitted with the application is as follows:
- $1,500 for a Level 1 Dealer
- $3,000 for a Level 2 or 3 Dealer
- $5,000 for a Level 4 Dealer
Each Member of the MFDA must pay annual fees based on the average of their assets under administration for the current and previous year. The definition of assets under administration can be found in MFDA MFDA Staff Notice MSN-0004 –Member Fee Guidelines. A tiered structure has been developed to calculate MFDA annual fees. The MFDA Board of Directors establishes the fee rates on an annual basis. For the current MFDA fee rates, please visit the Membership Fees page of this website. The fees are payable fifteen days following the beginning of each quarter.
All MFDA Members are expected to maintain the minimum capital amounts required under MFDA Rule 3.1.1 as noted below.
- $25,000 for a Level 1 Dealer
- $50,000 for a Level 2 Dealer
- $75,000 for a Level 3 Dealer
- $200,000 for a Level 4 Dealer
MFDA Members are required to maintain a financial institution bond or bonds and/or mail insurance in amounts as prescribed in MFDA Rule 4
MFDA Members must appoint an auditor who shall examine the accounts of the Member and report annually to the MFDA and MFDA Investor Protection Corporation.
MFDA Investor Protection Corporation Assessments
The MFDA Investor Protection Corporation offers coverage to eligible customers of MFDA Members for customer losses occurring as a result of the bankruptcy or insolvency of an MFDA Member. Assessments for the MFDA IPC are based on the MFDA Member’s assets under administration Please refer to the Membership Fees page on this website for details regarding assessment amounts.
General Operating Expenses
As a result of carrying on business, MFDA Members will have general and ongoing operating expenses. Such expenses may include, but are not limited to, leasing of premises; purchase of capital assets (e.g. computers, office furniture); other leaseholds; contracts with service providers; etc.
2. How does a company become registered as a mutual fund dealer?
A company can become registered as a mutual fund dealer by completing and submitting an application for registration with appropriate securities regulatory authority in each of the provinces or territories in which the company wants to carry on business. Links to the website of each securities regulatory authority can be found on the Related Links page of this site.
3. How does a company become a Member of the MFDA?
A company wishing to become registered as a mutual fund dealer must apply for membership in the MFDA, and at the same time should apply for registration as a mutual fund dealer (see Question 2 above). A company must fully complete the MFDA Membership Application Package. To view the Membership Application Package, please click on the Membership page of this site.
4. Must a company that is seeking registration as a mutual fund dealer become a Member of the MFDA?
Provincial securities regulation requires that in order for a company to become registered with the securities regulatory authority, it must become a Member of the MFDA. The exception is where a mutual fund dealer has operations ONLY in the province of Québec.
5. How long does it take to become a Member?
The time it takes for the MFDA to approve an application for membership depends significantly upon the quality and completeness of the application submitted. To speed up the application process, respond fully to all questions and ensure that all required documents are submitted. Further, review MFDA By-laws, Rules, Policies and Forms to ensure all documents submitted evidence compliance with MFDA requirements. For example, a policies and procedures manual must be submitted and must adequately evidence the applicant’s ability to comply with MFDA requirements.
6. What are the ongoing obligations of MFDA membership?
Some of the ongoing obligations of MFDA Membership include, but are not limited to, the following:
- Monthly financial reporting and Annual Audited financial reporting
- Reporting of material changes
- Adherence to MFDA rules and by-laws
- Keeping up-to-date with new regulations and interpretations
- Monitoring of risk adjusted capital and subordinated debt
7. What are the differences between the MFDA’s four dealer levels?
- Level 1 – A dealer that does not hold client cash, securities or other property and introduces all of its accounts to a carrying dealer, which has joint compliance responsibilities.
- Level 2 – A dealer that does not hold client cash, securities or other property. Dealers at this level operate in a client name environment and do not use a trust account to hold client cash.
- Level 3 – A dealer that holds client cash in a trust account, but does not hold client securities or other property. Dealers at this level operate in a client name environment, and use a trust account to hold client cash.
- Level 4 – A dealer that acts as a carrying dealer, or any other dealer not covered by Level 1, 2, or 3 (i.e. a dealer that holds client securities or other property in nominee name accounts or in physical storage).
8. How does a salesperson become registered?
Under MFDA Rules and National Instrument 31-103 Registration Requirements and Exemptions (“NI-31-103”), each Approved Person who is a salesperson and who trades or deals in securities in respect of a Member must have:
- passed the Canadian Investment Funds Course Exam, the Canadian Securities Course Exam or the Investment Funds in Canada Course Exam; or
- earned a CFA Charter and have 12 months of relevant investment management experience in the 36-month period before applying for registration; or
- received the Canadian Investment Manager designation and have 48 months of relevant investment management experience, 12 months of which was in the 36-month period before applying for registration.
Once the individual has completed the above-noted proficiency, he or she must obtain a sponsoring mutual fund dealer within 36 months. The sponsoring dealer will provide the necessary forms to complete and then submit the completed application for registration to the provincial securities commission. The candidate cannot trade in securities until written confirmation of registration has been received from the Commission.
For more information see: