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Bulletin #0234-M

Membership Information
Rule 2.4.1 (Payment of Commissions to Non-Registered Entities) - Extension of Transition Period to December 31, 2008

Mutual Fund Dealers Association of Canada
Association canadienne des courtiers de fonds mutuels
121 King Street West, Suite 1000, Toronto, Ontario, M5H 3T9
TEL: 416-361-6332 FAX: 416-943-1218 WEBSITE: www.mfda.ca

Contact: Mark
Stechishin
BULLETIN #0234 – M
Senior Legal & Policy Counsel
November 17, 2006
Phone: 416-943-4677
E-mail: mstechishin@mfda.ca



MFDA Bulletin

Membership Information

For Distribution to Relevant Parties within your Firm

Rule 2.4.1 (Payment of Commissions to Non-Registered Entities)-
Extension of Transition Period to December 31, 2008

The Securities Regulatory Authorities in British Columbia, Nova Scotia, Ontario and
Saskatchewan have approved an extension of the suspension period for Rule 2.4.1 (Payment of
Commissions to Non-Registered Entities) to December 31, 2008. MFDA staff will be seeking
approval from the Board of Directors of the MFDA for a similar extension later this month.

MFDA Rule 2.4.1 requires that any remuneration in respect of business conducted by an
Approved Person on behalf of a Member be paid by the Member (or an affiliate) directly to and
in the name of the Approved Person. The Securities Regulatory Authorities in British Columbia,
Nova Scotia, Ontario and Saskatchewan approved a three year suspension period for Rule 2.4.1
as a term of recognition of the MFDA. The period of the suspension was subsequently extended
and has been extended again for a further two years, to December 31, 2008. As a result, provided
that certain conditions are satisfied, Members with Approved Persons registered in these
jurisdictions are permitted to pay commissions on behalf of those Approved Persons to a
corporation that is itself not registered as a dealer or a salesperson, notwithstanding the
provisions of Rule 2.4.1.

As condition of relying on this suspension period, Members and their Approved Persons
are reminded that they must comply with all other MFDA Rules, including Rule 1
(Business Structures and Qualifications) and Rule 1.2.1(d) (Dual Occupations) and with the
conditions prescribed by the MFDA in Member Regulation Notice MR-0002 (Payment of
Commissions to Non-Registered Entities).

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Securities Regulatory Authorities in Alberta have advised the MFDA that they will not allow
Members operating in that province to rely on this transition period. Accordingly, Members must
pay commissions directly to all salespersons registered in Alberta.

Doc #94244
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