Sales Rep Registration Requirements

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Questions and Answers

What is the minimum relevant investment management experience required if an individual uses the CFA Charter for registration?

24 months

6 months

36 months

12 months (correct)

Which of the following courses is NOT listed as an approved program for registration?

The Canadian Securities Course

The Certified Financial Planner Course (correct)

The Canadian Investment Funds Course

The Investment Funds in Canada Course

What is the purpose of the National Registration Database (NRD)?

To harmonize and improve the registration process for sales representatives (correct)

To provide a platform for mutual fund dealers to advertise

To track the performance of registered sales representatives

To centralize the examination process for financial advisors

If a candidate passed their examination 40 months ago, under what condition can they still apply for registration?

If they have been registered in the same category for any 12 months during the last 36 months Signup and view all the answers

Which requirement is NOT necessary for sales representatives before they can sell mutual funds?

Trade experience in securities Signup and view all the answers

In addition to the approved program, what other designation can allow an individual to register as a dealing representative?

Canadian Investment Manager designation Signup and view all the answers

What is the role of the companion policy to National Instrument 31-103?

To explain exemptions to registration requirements Signup and view all the answers

How many months before applying for registration must the examination be passed or the program be completed?

36 months Signup and view all the answers

Which provinces allow sales representatives to advertise their registration with a securities commission?

British Columbia and Alberta Signup and view all the answers

What is the primary reason for the restrictions on sales representatives advertising their registration?

To avoid the appearance of endorsement by the securities regulators Signup and view all the answers

What must not be displayed by sales representatives or their branches?

Registration certificates Signup and view all the answers

What does the term 'tied selling' refer to in the context of sales representatives?

Requiring a client to make a specific purchase to receive other products or services Signup and view all the answers

How should a sales representative be clearly identified within a branch?

Through the use of business cards and nameplates Signup and view all the answers

What must flow through the mutual fund dealer regarding sales commissions?

Sales and trailer commissions Signup and view all the answers

What is prohibited regarding side arrangements for sales incentives among employees?

Payment for referrals or material benefits Signup and view all the answers

What type of promotional items can mutual fund companies provide to sales representatives?

Promotional items of low value Signup and view all the answers

What is the primary aim of National Instrument 81-105 in mutual fund sales practices?

To minimize conflicts of interest between dealers and investors Signup and view all the answers

Which of the following benefits can mutual fund companies provide to dealers under NI 81-105?

Sales commissions and trailing commissions within prescribed limits Signup and view all the answers

What must be done before a mutual fund company provides benefits to sales representatives?

Approval must be obtained from the head office Signup and view all the answers

Who is NOT allowed to sell mutual funds or offer advice about them according to the provided regulations?

Non-registered individuals who completed a mutual funds course Signup and view all the answers

Which of the following statements about investment dealers in Canada is accurate?

All affiliated sales representatives must be registered with a provincial regulator. Signup and view all the answers

Under NI 81-105, which of the following actions is prohibited?

Providing promotional items without head office approval Signup and view all the answers

What types of products are offered by investment dealers in Canada?

Securities such as shares, bonds, and exempt products Signup and view all the answers

Sales practices that involve commission rebates are subject to which of the following according to NI 81-105?

They must be approved by the head office. Signup and view all the answers

Who is responsible for ensuring a registered firm's overall compliance with securities law?

Chief executive officer Signup and view all the answers

What must sales representatives obtain before engaging in any business outside of the mutual fund dealer?

Written permission from the head office or RCO Signup and view all the answers

Which activity is NOT allowed for sales representatives under the guidelines of the mutual fund dealer?

Engaging in volunteer work for a non-profit organization Signup and view all the answers

What is necessary for the transfer of registration for a sales representative moving to a new mutual fund dealer?

The appropriate forms must be filed with the RCO Signup and view all the answers

Under which policy do individuals register in multiple jurisdictions in Canada by dealing with a principal regulator?

National Policy 11-204 Signup and view all the answers

What is required when a new employee is hired who is not registered in the province or territory?

Application for registration must be filed through NRD Signup and view all the answers

What is one of the consequences of sales representatives engaging in prohibited outside activities?

Immediate termination of employment Signup and view all the answers

Which of the following is true regarding the chief compliance officer in a registered firm?

They oversee daily compliance matters Signup and view all the answers

What is typically required if a sales representative's registration has been suspended for three years or more?

Completing a new registration application and proficiency courses Signup and view all the answers

What is the role of the BCO in maintaining registration status for dealing representatives?

To file changes in representative information and ensure ongoing compliance Signup and view all the answers

What must happen before a suspended sales representative can engage in sales activities again?

Their transfer of registration must be confirmed by regulatory authorities Signup and view all the answers

How often must registered individuals pay fees to maintain their registration under NI 31-103?

Annually Signup and view all the answers

What must the continuing education (CE) program ensure for registered salespersons?

That they regularly update their skills and knowledge Signup and view all the answers

What occurs when a dealing representative's registration is suspended?

They may not engage in any activity requiring registration Signup and view all the answers

If a registered individual wishes to transfer their registration, what is essential?

The securities regulatory authorities must confirm the transfer Signup and view all the answers

What must a BCO do when there is a change in information for a sales representative?

File a notice of change with the securities regulators Signup and view all the answers

Study Notes

Registering as a Sales Rep

Individuals wanting to work as a dealing rep for a mutual fund dealer must satisfy requirements outlined in National Instrument 31-103 – Registration Requirements and Exemptions (NI 31-103).
The individual must complete one of three accredited courses: The Investment Funds in Canada Course, The Canadian Securities Course, or The Canadian Investment Funds Course.
Alternatively, individuals can satisfy requirements by earning a CFA Charter and 12 months of experience OR the Canadian Investment Manager designation and 48 months of experience, with 12 months within the last 36 months.
There’s a 36 month time limit to apply for a licence after completing an approved exam or program.
If the exam or program completion date is more than 36 months prior, the individual can still apply if they were approved in the same registration category for any 12 months in the 36 months prior to application.

Post-Registration Requirements

Representatives must apply for registration through the National Registration Database.
Sales reps cannot advertise that they’re registered with a securities commission or that a regulator approves their qualifications. Registration merely indicates the individual meets the requirements of the regulator.
Reps must be clearly identified within the branch when acting on behalf of the mutual fund dealer.
Reps cannot require a particular purchase or investment as a condition of buying other products or services (tied selling).

Sales Incentives & Compensation

Branch Compliance Officers (BCOs) are responsible for ensuring that reps don’t receive unauthorized sales incentives. Compensation details are determined at the head office and branch level incentives are not allowed.
Reps cannot enter into side arrangements where compensation or other material benefits are paid for referrals.
Reps cannot directly receive sales commissions or other compensation from mutual fund companies. All compensation must flow through the mutual fund dealer.

Mutual Fund Company Benefits to Reps

Mutual fund companies can provide promotional items or invite reps to business promotion activities, as long as the items or activities are not so valuable or frequent that they would cause a reasonable person to question whether the benefits have improperly influenced the advice the sales representatives are providing to their clients.
There are also limitations on the portion of mutual fund dealer advertising that can be paid for by mutual fund companies.

Categories of Registration

Investment dealer: A firm that offers various investment products such as shares and bonds, mutual funds, exchange-traded funds, limited partnerships, and exempt products.
Ultimate designated person: The chief executive officer of a registered firm who is responsible for the firm’s overall compliance with securities law.
Chief compliance officer: A person who manages a registered firm’s day-to-day compliance with securities law.

Outside Activities

Reps must obtain permission from the BCO or head office before engaging in activities that might create a conflict of interest, such as:
- Engaging in any business other than that of the mutual fund dealer
- Accepting employment or compensation from any person or organization other than the mutual fund dealer
- Serving as an officer, director, or partner of any business organization

Transfer of Registration

When a rep from another registered mutual fund or securities dealer is hired, their registration must be transferred to the new dealer.
Reps who are not registered in the new province or territory must apply for registration.
Transfers are filed through the NRD and require registration fees.
Representatives who have a suspended registration or have previously been suspended may need to re-apply and re-take proficiency courses.

Post-Registration Reporting & Compliance Responsibilities

BCOs are responsible for ensuring that registration status is maintained.
Responsibilities may include: filing notices of changes in information with the securities regulators, transferring registration, and terminating employee contracts.
Continuing education (CE) requirements apply in each province and territory.
Annual renewal of registration is not required, but fees must be paid every year.

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Description

This quiz reviews the necessary steps and qualifications for individuals looking to register as a sales representative for mutual funds. It covers accredited courses, alternative qualifications, and important timelines related to licensing applications. Ensure you understand the National Instrument 31-103 requirements to successfully navigate the registration process.