Contact: Paige Ward
General Counsel & Vice-President, Policy
November 12, 2013
For Distribution to Relevant Parties within your Firm
Transactions by Approved Persons in
Syndicated Mortgage Securities
MFDA staff has become aware that Approved Persons licensed as mortgage brokers may have
been advised or may be of the view that they can rely on their mortgage broker license and the
available dealer registration and prospectus exemptions in securities legislation, in certain
jurisdictions, to transact in syndicated mortgages outside of the Member, contrary to the
requirements of MFDA Rule 1.1.1.
MFDA Rule 1.1.1 (Business Structures – Members) requires all securities related business to be
carried on for the account of the Member and through the facilities of the Member. MFDA By-
law No. 1 defines “securities related business” as any business or activity engaged in, directly or
indirectly, which constitutes trading or advising in securities for the purposes of applicable
securities legislation in any jurisdiction in Canada, including securities sold pursuant to
exemptions under applicable securities legislation.
Members and Approved Persons are reminded that syndicated mortgages are securities and that
transactions in respect of them come within the definition of securities related business, as set out
under By-law No. 1. As a result, transactions engaged in by Approved Persons in respect of such
securities must be done through the Member, in accordance with the requirements of Rule 1.1.1,
and are subject to all applicable MFDA Rules. An Approved Person cannot sell syndicated
mortgages under a mortgage broker license outside the Member.
Members are also reminded that, when reviewing referral arrangements with mortgage brokers
or other parties involved in providing mortgage or real estate services, Members should
determine the nature of the products and services to be provided by the other party. Members
should be particularly aware of the risk that referrals may result in the sale of a specific security.
Please refer to MSN-0043 Referral Arrangements in Respect of Specific Securities for further