3402. Retail client suitability requirements

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    1. When a suitability determination must be made.

      Subject to the applicable exemptions and exceptions set out in section 3404, a suitability determination must be made for a retail client:

      1. before any order is accepted from the client,

      2. before a recommendation is made to the client to purchase, sell, exchange or hold a security, and

      3. whenever one or more of the following non-trading related triggering events occurs:

        1. securities are received into or delivered out of the client’s account by way of deposit, withdrawal or transfer, 

        2. there is a change in the Registered Representative, Portfolio Manager or Associate Portfolio Manager responsible for the account, or

        3. there is a material change to the client’s life circumstances or objectives that has resulted in revisions to the client’s “know-your-client” information as maintained by the Dealer Member.

    2. How a suitability determination must be made.

      ​​​​​​​When a suitability determination must be made for a retail client pursuant to subsection 3402(1), a Dealer Member shall use due diligence to ensure that:

      1. before any order is accepted from the client, the order and the client’s investment portfolio that would result from accepting the order are suitable,

      2. before a recommendation is made to the client to purchase, sell, exchange or hold a security, the recommendation and the client’s investment portfolio that would result from acting upon the recommendation are suitable, or

      3. whenever one or more non trading related triggering events listed in clause 3402(1)(iii) occurs, the client’s investment portfolio continues to be suitable,

    3. based on factors including the client’s current financial situation, investment knowledge, investment objectives and time horizon, risk tolerance and the client’s current investment portfolio composition and risk level.

    4. Required actions once a suitability determination has been made.

      ​​​​​​​Once each suitability determination has been made, the Dealer Member must use due diligence to ensure that: 

      1. the client receives appropriate advice in response to each suitability review that is conducted, and

      2. where an order received from the client is determined to not be suitable, the Dealer Member: 

        1. ​​​​​​​must advise the client against proceeding with the order, and 

        2. must not proceed with the order unless the client instructs the Dealer Member to proceed notwithstanding the Dealer Member’s determination that the order is not suitable.

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