Who Are Exempt Market Dealers?

Specialized Private Capital Dealers.

EMD’s are fully registered investment dealers who engage in the business of trading in securities to qualified exempt market clients. EMD’s are subject to full dealer registration and compliance requirements and are directly regulated by the provincial securities commissions. The regulatory framework for EMD’s is set out in National Instrument 31- 103 Registration Requirements, Exemptions and Ongoing Registrant Obligations (NI 31- 103) and it applies in every jurisdiction across Canada.

EMD’s may act in two primary capacities in the capital markets:

  1. as a dealer or underwriter for any securities which are prospectus exempt,
  2. as a dealer for any securities, including investment funds which are prospectus qualified (mutual funds) or prospectus exempt (pooled funds), provided they are sold to clients who qualify for the purchase of exempt securities.

Conversion factors

EMD’s Provincial Regulatory Obligations Include

  • educational proficiency;
  • capital and solvency standards;
  • insurance;
  • audited financial statements;
  • KYC, KYP and trade suitability;
  • compliance policies and procedures;
  • books and records;
  • trade confirmations and client statements;
  • disclosure of conflicts of interest and referral arrangements;
  • complaint handling;
  • dispute resolution;
  • prudence business practices requirements;
  • registration obligations; and
  • submission to regulatory oversight and dealer compliance reviews.

EMD’s may focus on certain market sectors (e.g., oil and gas, real estate, mining or minerals, technology, venture financing, etc.) or may have a broad cross-sector business model. EMD clients may be companies, institutional investors, accredited investors or investors who purchase exempt securities pursuant to an offering memorandum or another available prospectus exemption.

EMD’s provide many valuable services to small and medium size enterprises (SMEs), large corporations, investment funds, merchant banks, financiers, entrepreneurs, and individual investors, through their ability to participate in the promotion, distribution and trading of securities, as either principal or agent.