Compliance Memo

CM_2020-02; Update to trade processing related to deposits

For more information, contact:

Compliance Team
compliance@gpwealth.ca

Date Issued:

December 10, 2020

As you know, we have been working with our bank and the MFDA over the last few years to better understand the requirements that we must adhere to when managing deposits and transferring funds to fund companies and intermediaries to settle trades.

Our obligation as a Dealer is to verify that deposits have cleared the banking system and are available for trading. As a result, it is necessary that we implement procedures that meet this regulatory obligation which are outlined below.

Deposits made at a Bank Branch, via ChequePro, or One-Time PAC

Please note, effective immediately, all deposits made at a Bank Branch, via ChequePro, or One-Time PAC, regardless of amount, must be held for 3 business days following the deposit date. This is to ensure that funds are cleared without errors and are not returned unpaid. This fine balance between the risk of NSF and timely execution of trades will ensure that:

  • Trade cancellations due to NSFs should be eliminated or significantly minimized
  • The clients’ experience is enhanced as the need to attribute any losses to them should be eliminated or significantly minimized
  • GPWM is compliant with MFDA Rules which prohibit the use of dealer funds to pay for a client's trade(s)
  • Our resources are efficiently used reducing the need to deal with the same item again due to a NSF

Unless you receive an email from the accounting department that the funds have been returned unpaid or were not received due to an error, you may process trades 3 business days following the actual deposit date (D+3). For example, for a deposit made on a Friday, the trade should be placed on the following Wednesday unless the accounting department advises otherwise.

Important Notice:

Any trades placed, where the deposit has subsequently not cleared the banking system and results in an NSF, will be cancelled immediately. All trading losses, NSF fees and a $50.00 administration fee will be charged to the financial advisor.

Only Exception – Deposits received via Bill Payment

Bill Payment deposits are considered cleared when received into our trust account as clients can only transfer amounts that are cleared in their bank account. Once you receive confirmation from the accounting department that a bill payment deposit has been received, the trades can be processed immediately.

Important Reminder: Year-End Trading

Any transaction in an investment fund with a settlement schedule of T+2 must be placed no later than Tuesday, December 29th to settle the transaction in the 2020 calendar year. As a result, the latest you can deposit funds to a branch, via ChequePro or One-Time PAC is Thursday December 24, 2020 for trades to settle in the 2020 calendar year.

As always, if you have questions or comments, contact the Compliance Department by email at compliance@gpwealth.ca.