US brokerage firms in Canada: Clearing up the confusion

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by Natalie MacLellan on September 30, 2010

in In the News, Securites Laws

US securities firm Wells Fargo has decided to stop offering brokerage accounts in Canada, as of September 28, 2010, citing “new” restrictions under Canadian law. This has left many Nova Scotian residents with US accounts upset, and asking why we would suddenly change the laws so drastically. To clarify, allow me to explain that in Nova Scotia, nothing has really changed.

The requirement for a person or company to register as an adviser in Nova Scotia to advise Nova Scotia residents on the buying or selling of securities has been in the Securities Act since it came into effect in 1987. In September of 2009, the Canadian Securities Administrators adopted National Instrument 31-103, which was intended to harmonize registration requirements across the country (previously, requirements were slightly different in each province or territory). Firms were given a one-year transition period in which to comply with the changes.

In some jurisdictions, this means stricter rules, but in Nova Scotia, the rules are still the same. An adviser must be registered in the province if he or she wishes to advise Nova Scotia clients about buying or selling financial products.

Whether US brokerage firms choose to operate in Canada is a business decision, based on weighing the costs of registering with the profit to be gained. The announced amendments to the rules may have prompted them to reconsider their operations here, but there is no new law restricting them from doing business in Nova Scotia.

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