Accredited Investor Exemption for Certain Derivatives Extended by Quebec AMF
The Quebec financial services regulator, the Autorité des marchés financiers (“AMF”), extended the accredited investor exemption for certain derivatives until June 5, 2016. AMF general decision no. 2015-PDG-0132 (“Extension Decision”) issued on August 26, 2015, postpones the repeal of general decision no. 2009-PDG-0007 (“Exemption Decision”) by an additional nine months.
This extension is important because it provides the derivatives sector with several months beyond the previously scheduled repeal date of September 5, 2015 to either register under the Quebec Derivatives Act (“QDA”) or put in place policies and procedures ensuring that the exempted transactions are carried out through a Quebec registered person.
The Extension Decision prolongs the exemption from the derivative dealer and adviser registration requirements as well as the derivatives qualification requirements of the QDA if a person carries on activities only with “accredited investors” with respect to the following types of derivatives and respects certain other conditions:
- an option or a negotiable futures contract pertaining to securities or a treasury bond futures contract
- an option on a commodity futures contract or a financial instrument futures contract
- a futures contract on a commodity, on a financial instrument, on currency or on a stock index
The types of derivatives - whether “standardised derivatives” (in general, exchange traded derivatives) or over-the-counter (“OTC”) - covered by the Exemption Decision were, prior to the coming into force of the QDA in February 2009, regulated under the Quebec Securities Act.
The Extension Decision also extends until June 5, 2016 the exemption to a person distributing these types of derivatives from the requirement to obtain from an accredited investor who is an individual and does not own the highest threshold of assets for an individual accredited investor a signed at-risk acknowledgment form (Form 45-106F9). The new at-risk acknowledgement form requirement took effect May 5, 2015 as a result of amendments to 45-106.
The accredited investor exemption in the Exemption Decision is distinct from the two exemptions which continue to be available under the QDA and the Quebec Derivatives Regulation (“QDR”): (i) the “accredited counterparties” exemption in section 7 QDA which exempts OTC derivative activities with “accredited counterparties” from most of the provisions of the QDA and (ii) the exemption from the derivatives dealer and advisor registration requirements provided in section 11.14 QDR to foreign dealers and advisors carrying on business only with “accredited counterparties” with respect to “standardized derivatives” (in general, exchanged traded derivatives) offered principally outside of Quebec.
A draft national instrument on derivatives registration requirements is currently expected to be published for comment by the Canadian Securities Administrators in the spring of 2016. We will continue to keep you posted on this and any further developments.
 The Extension Decision replaces AMF general decision no. 2015-PDG-0666 of April 22, 2015 which repealed the Exemption Decision as of September 5, 2015.
 As defined by National Instrument 45-106 - Prospectus Exemptions (“45-106”).
 The list of “accredited counterparties” in the QDA is distinct and diverges in several important ways from the list of accredited investors in 45-106.