General Counsel, Corporate Secretary and Vice President, Policy
MSN - 0014
Oct 2, 2002
Supervision Requirements for Licensed Assistants at Branch Offices
MFDA Staff Notices are intended to assist Members and their Approved Persons in the interpretation, application of and compliance with requirements under MFDA By-laws and Rules. Notices make reference to these requirements and set out MFDA staff's interpretation of how to comply with these requirements. Notices may also include best practices or guidance.
Many Members employ licensed assistants to provide administrative and sales support to their salespersons. These assistants are registered because they may engage in client related activities that could be considered to be acts in furtherance of a trade.
This Notice defines the limited conditions under which licensed assistants with no clients of their own may be excluded as “Approved Persons” when determining branch versus sub-branch status for the purpose of compliance with supervision requirements under MFDA Rule 2.5.3.
MFDA Rule 2.5.3 – Designation of Branch Managers
MFDA Rule 2.5.3 requires Members to designate a person qualified as a branch manager pursuant to Rule 1.2.2 for each branch office of the Member. The Member is not required to designate a branch manager for a sub-branch office who is normally present at the office, provided that a branch manager who is not normally present at such sub-branch office, or a trading partner, director or officer or a compliance officer designated as the branch manager for such sub-branch office, supervises its business at the sub-branch office in accordance with the By-laws and Rules.
“Sub-branch” is defined under MFDA By-law No.1 as any branch office having less than four Approved Persons.
Supervision Requirements for Licensed Assistants
The main purpose for requiring an on-site branch manager under MFDA Rule 2.5.3(a) for branches with four or more Approved Persons is to ensure that sales and account opening activities are appropriately supervised. Where licensed assistants are registered solely to engage in sales support tasks but do not solicit trades or engage in account opening activities, they need not be included in the count of Approved Persons in determining branch versus sub-branch status. MFDA staff will exercise discretion and consider the actual activities performed by the Approved Persons in determining whether an appropriate level of supervision is in place at a branch or sub-branch location.
Accordingly, Members will be permitted to exclude their licensed assistants from the count of Approved Persons in the determination of branch versus sub-branch status only under the following conditions:
- Licensed assistants are restricted to providing solely sales support and cannot establish their own client accounts.
- Licensed assistants are prohibited from opening new accounts or completing the Know-Your-Client process with clients.
- Licensed assistants cannot sign as a sales representative on account opening forms. Account opening forms must be signed by the salesperson who is supported by the licensed assistant.
- Licensed assistants can only trade on an unsolicited basis for accounts of the salesperson they are supporting.
- Licensed assistants cannot have their own sales code.
- The Member must establish a policy to be included in its policies and procedures manual that outlines the conditions above.
- It is the responsibility of the Member to ensure that it has a branch manager at each branch with four or more Approved Persons. If the Member chooses to exclude licensed assistants from the count of Approved Persons when determining branch versus sub-branch status, the Member must maintain adequate records and documentation supporting this decision. These records must be complete, accurate and current and must be available for inspection by the MFDA at any time.
If a Member cannot ensure that its licensed assistants meet the foregoing conditions or does not wish to limit the activities of its licensed assistants, this limited relief is not available and licensed assistants will count as Approved Persons when determining branch versus sub-branch status.
The MFDA reminds Members that licensed assistants must comply with all MFDA Rules and the Member is responsible for the acts and omissions of all its Approved Persons, including licensed assistants, in accordance with Rules 1.1.2 and 2.1.2.