Promoting a Culture of Compliance - the BCSC Registration Process
We take our registration process seriously. Registering new registrants is not a mechanical, check-the-box process. It is not enough to demonstrate proficiency, pass a detriment check, fill out the required forms, and pay the fee. We do not think that a narrow approach serves either the firm or the investing public well. A narrow approach at the outset would also create an added burden for our examinations team at its initial registrant examination some 18 to 24 months after registration. The better informed we are about your business before you register, the more likely it is your firm will be and stay compliant with securities regulation.
In addition to the demonstrating proficiency, we expect new registrants to demonstrate that they have thought about compliance and have in place fundamental compliance, supervisory, and risk management systems.
What Do We Look for in a Business Plan?
- executive summary
- nature of the business
- mission statement (philosophy)
- identify shareholders, affiliates, related parties, management, and permitted individuals; provide background on management and permitted individuals
- organizational chart and ownership chart
- related party chart
- business objectives (short and long term)
- market analysis
- target market
- business goals and strategies (short and long term on how objectives will be achieved), including strategy implementation)
- marketing (what and how)
- policies and procedures (Set out in a separate PPM)
- human resources plan (recruitment, training and staffing)
- three-year financial projection
- risk management (identify business and operational risks and how they will be addressed)
- timetables and milestones
- compliance function and process
- ultimate designated person’s (UDP) responsibilities and duties (daily monthly and annual)
- chief compliance officer’s responsibilities and duties (daily monthly and annual)
- PPM updates and acknowledgement to read?
- branch and head office supervision
- registration and renewal of registration
- new account opening procedures, including know-your- client (KYC) and suitability (cradle to grave account opening process)
- account supervision
- KYC update process (including how often)
- money laundering and anti-terrorism compliance
- proxy voting
- outside business activities
- custody and segregation of client assets
- trade confirmations and account statements
- disclosure when recommending related party or connected securities
- subscriptions and redemptions (cradle to grave process, including documents that need to be completed)
- personal trading
- insider and early warning reporting
- disaster recovery and business continuity plan (including incapacitation of key personal)
- oversight of outsourced services
- adverting sales communication and other client commutations
- referral arrangements and, if applicable, soft dollar arrangements
- borrowing for securities purchases and disclosure to clients
- human resources (hiring and training)
- conflicts of interest and disclosure to clients
- tied selling
- capital requirements, monitoring capital adequacy, and how excess working is calculated
- bonding and insurance
- books and records
When considering your application we may want to meet with the CCO and UDP of the firm to understand the firm’s business objectives.
Six to nine months after registration, our compliance team will visit your office for a post registration inspection. They will conduct an informal inspection of the firm’s operations to make sure that your procedures and operations reflect the business plan and PPM and meet the minimum requirements set out in NI 31-103.
The inspection provides an opportunity for your firm’s key personnel and the compliance team to continue an open dialogue about your business and your particular compliance challenges.