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Bulletin #0466-P

For further information, please contact:

Paige Ward
General Counsel, Corporate Secretary and Vice President, Policy
Policy
For Distribution to Relevant Parties within your Firm

New MFDA Rule 2.4.4 (Transaction Fees or Charges) and Amendments to MFDA Rule 5.1 (Requirement for Records)

New MFDA Rule 2.4.4 (Transaction Fees or Charges) and amendments to MFDA Rule 5.1 (Requirement for Records) have received all requisite approvals and are now in effect.

New Rule 2.4.4 will require that, prior to the acceptance of an order, the Member inform the client of any sales charge, service charge or any other fees or charges to be deducted in respect of the transaction. Conforming changes have been made to Rule 5.1(b) by adding subsection (iv), which will require Members to maintain records evidencing that the client was informed of all fees and charges in accordance with Rule 2.4.4.

To provide Members and Approved Persons with further guidance and clarification in respect of the new disclosure and record-keeping requirements, staff has issued Member Regulation Notice MR-0078 – MFDA Rules 2.4.4 (Transaction Fees or Charges) and 5.1(b)(iv) (Requirement for Records).

The amended Rules are attached as Schedule “A”.

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Schedule “A”

2.4.4 Transaction Fees or Charges. Prior to the acceptance of any order in respect of a transaction in a client account, the Member shall inform the client of any sales charge, service charge or any other fees or charges to be deducted in respect of the transaction.

5.1 REQUIREMENT FOR RECORDS

Every Member shall keep such books, records and other documents as are necessary for the proper recording of its business transactions and financial affairs and the transactions that it executes on behalf of others and shall keep such other books, records and documents as may be otherwise required by the Corporation. Such books and records shall contain as a minimum the following:

  1. an adequate record of each order, and of any other instruction, given or received for the purchase or sale of securities, whether executed or unexecuted. Such record shall show:
    1. the terms and conditions of the order or instructions and of any modification or cancellation thereof;
    2. the account for which entered or received; and
    3. the time of entry or receipt, the price at which executed and, to the extent feasible, the time of execution or cancellation; and
    4. evidence that the client was informed of all fees and charges in accordance with Rule 2.4.4