Wealth Up Investments | Your Exempt Market Specialists
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Exempt Market Dealers

Before National Instrument 31-103 was introduced in September, 2009, there were few regulations in the Exempt Market:

  • Offering Memorandums were filed with the provincial Securities Commission but not reviewed by them.
  • Sales people had varying degrees of experience and knowledge.
  • Companies raising money also had varying degrees of experience and knowledge and occasionally, questionable or fraudulent backgrounds.

In order to overcome these difficulties, make uniform rules and regulations and decrease the risk for investors, the Exempt Market Dealer was introduced.  The Exempt Market Dealer essentially fills in all of the gaps to make sure that investments being offered to clients are sound and the people selling them are competent professionals.

So what is an Exempt Market Dealer?  The following description is taken directly from The Exempt Market Dealers Association of Canada.

Exempt market dealers are fully registered dealers who engage in the business of trading in exempt securities and whose clients are usually companies, sophisticated or institutional investors, or people who are otherwise eligible to trade securities in the exempt market under applicable securities laws.

Exempt market dealers provide many valuable services to small, medium and large businesses, investment funds, merchant banks, financiers, entrepreneurs and individual investors through their ability to participate in the promotion, distribution and trading (i.e., buying and selling) of securities, as either a principal or agent.

Exempt marker dealers are subject to full dealer registration requirements which include: proficiency; capital and solvency; insurance; audited financial statements; know-your-client and trade suitability obligations; compliance systems; recordkeeping; client statements; trade confirmations; disclosure of conflicts of interest; and referral arrangements. The exempt market dealer registration category exists in all provinces and territories of Canada.

So, to put it in layman’s terms, the Exempt Market Dealer is now the safety net for everyone involved in this industry.

  • They must be fully compliant with all regulations put in place by the federal government and answer to their own provincial securities commission.
  • In order to raise capital from the public, private companies must now have their product listed with an Exempt Market Dealer.
  • The Exempt Market Dealer uses a CCO to complete extensive due diligence on each issuer and investment opportunity that they offer. 
  • Individuals who raise money from investors must be licensed and registered with an Exempt Market Dealer.

These standards have been put in place to protect you, the investor.  If you decide to pursue a private investment opportunity, please ensure that the product you are looking at is offered through an EMD and that the person selling it to you is registered.  When you go this route, you can be assured that you have all possible safeguards in place for your investment.