What Is NI 31-103? Registration, Duties, and Exemptions

National Instrument 31-103 is the Canada-wide rule that determines who must register with securities regulators to trade in or advise on securities, what qualifications and financial standards registered firms and individuals have to meet, and how they must treat clients once registered. It was adopted by the Canadian Securities Administrators (CSA) and applies uniformly across every province and territory, with the current consolidated version taking effect January 1, 2026.¹ If you deal in securities for compensation, advise others on them, or manage an investment fund, this is the instrument that governs your conduct.

Who Has to Register Under NI 31-103

Registration is triggered when activity crosses what regulators call the business trigger. The threshold is lower than many people assume, and no single factor decides it. Regulators look at the whole picture, weighing several indicators together:²

Acting like a registrant — promoting securities, stating a willingness to buy or sell, or setting up a business to do so.
Intermediating trades, including making a market in securities.
Repeating the activity frequently or regularly, even if it isn’t your main line of work.
Receiving or expecting compensation in any form, whether per-transaction or otherwise.
Soliciting potential buyers or sellers directly.

Someone who regularly connects investors with private companies for a finder’s fee can trigger the requirement without ever thinking of themselves as being in the securities business. If any combination of these factors describes what you do, assume registration is in play and get regulatory or legal advice before continuing.

Firm Registration Categories

Firms register in the category that matches the services they provide. Each one carries distinct permissions and limits.³

Investment dealer — can trade any type of security. These firms are supervised by the Canadian Investment Regulatory Organization (CIRO).⁴
Mutual fund dealer — limited to mutual fund securities, also under CIRO supervision.
Exempt market dealer — trades in securities distributed under prospectus exemptions, typically private placements.
Scholarship plan dealer — restricted to group education savings plans.
Restricted dealer — a tailored category for business models that don’t fit the others, with conditions set at registration.

On the advising side, a portfolio manager can advise on any security and exercise discretionary authority over client accounts, meaning the manager decides on trades without approval for each one. A restricted portfolio manager has the same function but is confined to specific securities or activities set by the conditions on its registration.⁵

Investment fund managers sit in a separate category. They direct the business, operations, and affairs of an investment fund, which is a different role from advising individual clients.³

Individual Registration and Proficiency

People don’t just work for a registered firm. They hold their own registration tied to a specific role. The common individual categories are dealing representative (trades for the firm’s clients), advising representative (gives investment advice), and associate advising representative (a more junior advising role carrying supervision requirements). Each firm category also has its own chief compliance officer registration.³

Proficiency is role-specific and runs through designated exams and, for some positions, professional designations. Exam results have a 36-month shelf life. If more than three years pass between passing the exam and applying for registration, the applicant must either have held registration in the same category or gained 12 months of relevant securities industry experience during that period.⁵

Beyond exams, regulators run a fit and proper review covering criminal history, past regulatory sanctions, and financial solvency. An undischarged bankruptcy can disqualify an applicant, because financial distress creates obvious risks when handling other people’s money.

The Two Compliance Roles Every Firm Needs

Every registered firm must appoint an ultimate designated person (UDP) and a chief compliance officer (CCO).³

The UDP is usually the firm’s CEO or equivalent and carries overall responsibility for the firm’s compliance culture. When systemic problems emerge — patterns of unsuitable advice, poor supervision, conflicts left unmanaged — the UDP is the person regulators look to first.

The CCO runs day-to-day compliance: building the internal systems that monitor for rule breaches, keeping staff on policy, and escalating issues. One person sometimes fills both roles at smaller firms, but the responsibilities stay distinct. These are not ceremonial titles. NI 31-103 itself does not prescribe penalties; enforcement flows through provincial and territorial securities legislation, and the consequences for compliance failures can include fines and imprisonment under the applicable act.

Your Duties to Clients Once Registered

The Client Focused Reforms, phased in during 2021, rewrote the core duties registrants owe to clients. The conflict-of-interest changes came into force on June 30, 2021, and the KYC, KYP, and suitability changes on December 31, 2021.⁶

Know Your Client

KYC requires registrants to collect detailed information about each client — financial situation, investment knowledge, risk tolerance, risk capacity, investment objectives, and time horizon — and to review and update that information at regular intervals and whenever significant changes come to light.³

Know Your Product

KYP requires firms to assess, approve, and monitor every security they make available to clients, including structure, features, risks, and costs over time. Individual representatives must understand the securities they recommend well enough to meet their suitability obligations.⁷ A firm can’t simply list every product on a platform without vetting; making a security available means the firm has signed off on it through its approval process.

Suitability and the Client’s Interest First

Before buying or selling a security for a client, recommending a transaction, or taking any other investment action, the registrant must reasonably determine that the action is suitable for the client and puts the client’s interest first.³ That second requirement was the most consequential change the Client Focused Reforms introduced.

The analysis has to weigh KYC information, the KYP assessment, the impact on portfolio concentration and liquidity, the drag of costs on returns, and the range of alternatives the firm offers. When several options are suitable, the registrant must pick the one that prioritizes the client’s interest over competing considerations, including the registrant’s own compensation.⁶

If a client insists on a trade that fails the suitability test, the registrant can execute it, but only after explaining why it doesn’t pass, recommending a suitable alternative, and getting recorded confirmation that the client wants to proceed anyway. Marking the order “unsolicited” isn’t enough.⁸

Conflicts of Interest

Firms must identify every material conflict of interest between the firm or its people and the client, then address each conflict in the client’s best interest. The same obligation applies to individuals, who must identify and report material conflicts to the firm.³ Addressing a conflict means either avoiding it or applying controls strong enough to serve the client’s best interest. Conflicts that can’t be mitigated to that standard must be avoided.⁶ Compensation structures, referral arrangements, and proprietary product incentives all come under this lens.

Relationship Disclosure

At account opening, firms must deliver written relationship disclosure covering everything a reasonable investor would consider important: account type, where client assets are held, fees and charges (including the compounding effect of ongoing costs), the firm’s suitability obligations, the content and frequency of account reporting, and how performance benchmarks can be used.²

Trusted Contact Person and Temporary Holds

Firms must take reasonable steps to get the name and contact information of a trusted contact person (TCP) from each individual client. The firm can reach out to the TCP if it suspects financial exploitation or diminished mental capacity, or if it needs updated contact information or the name of a legal representative.³ A client can decline to name a TCP, and the firm cannot refuse to open or maintain the account on that basis.

When a firm reasonably believes a client is being financially exploited or lacks the capacity to make financial decisions, it can place a temporary hold on transactions. The firm must document its reasons, notify the client as soon as possible, and review the hold regularly. Every 30 days, the firm must either lift the hold or give the client notice that it continues, along with the reasons.³

Dispute Resolution

All registered dealers and advisers must use the Ombudsman for Banking Services and Investments (OBSI) as their dispute resolution service. Québec is the exception; registrants there use the mediation process administered by the Autorité des marchés financiers.⁹

Capital, Insurance, and Records

Registered firms must maintain minimum working capital so they can meet obligations to clients and creditors. The floors are $50,000 for dealers and $100,000 for investment fund managers. Firms calculate their excess working capital on Form 31-103F1, which adjusts for risk factors and can push the effective requirement higher.¹⁰ If capital falls below the minimum, the firm must notify the regulator; the consequences can include trading restrictions or suspension of registration.³

Separate from capital, NI 31-103 requires dealers, advisers, and investment fund managers to carry insurance, with global bonding provisions for firms operating across jurisdictions. The coverage protects against losses from events such as employee dishonesty. Letting insurance lapse or dropping below the capital minimum can bring administrative penalties or revocation of registration.

Records required under securities legislation must be kept for seven years from the date each one is created, stored safely, in durable form, and in a way that lets the firm produce them for the regulator within a reasonable period.⁵ Firms are also expected to maintain tailored compliance policies and procedures covering trade supervision, complaint handling, and conflict monitoring. Vague or generic policies are a common deficiency flagged in compliance reviews.¹¹

Exemptions From Registration

Not every firm that touches securities needs full Canadian registration. NI 31-103 contains several exemptions, most of them aimed at foreign firms and transactions with sophisticated investors.

The international dealer exemption lets a foreign firm engage in limited trading in Canada, mostly with permitted clients and investment dealers, without registering here. The firm must be registered and regulated in its home jurisdiction, have its head office abroad, and submit Form 31-103F2 appointing an agent for service in Canada. It must also notify each permitted client that it is not registered in Canada and that its assets may be located outside Canada and beyond the reach of Canadian courts.⁵ The international adviser exemption works the same way for foreign firms advising permitted clients.¹²

Many exemptions turn on the client being a permitted client, a defined category that includes Canadian financial institutions, registered firms, governments, individuals who beneficially own financial assets exceeding $5 million (before taxes, net of related liabilities), and companies with net assets of at least $25 million.⁵ The thresholds reflect the assumption that investors at this level can evaluate risks without the full protections of the registration regime.

Relying on an exemption is not a one-time filing. Foreign firms have to submit the required forms, notify regulators in each relevant jurisdiction, and keep meeting all conditions on an ongoing basis. Falling out of compliance with the conditions, or missing a filing, can mean losing the exemption and facing enforcement action.

1
Autorité des marchés financiers. 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations
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Alberta Securities Commission. Companion Policy 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations
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Ontario Securities Commission. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations
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Canadian Investment Regulatory Organization. CIRO – Canadian Investment Regulatory Organization
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Ontario Securities Commission. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations
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Canadian Securities Administrators. Client Focused Reforms – Frequently Asked Questions
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British Columbia Securities Commission. National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations
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Canadian Securities Administrators. Client Focused Reforms Frequently Asked Questions
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Canadian Securities Administrators. Canadian Securities Regulators Mandate OBSIs Dispute Resolution Service for Registered Dealers and Advisers
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Ontario Securities Commission. Form 31-103F1 Calculation of Excess Working Capital
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Ontario Securities Commission. Joint CSA/CIRO Staff Notice 31-368 Client Focused Reforms: Review of Registrants Know Your Client, Know Your Product and Suitability Determination Practices and Additional Guidance
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Ontario Securities Commission. Companion Policy 31-103CP Registration Requirements, Exemptions and Ongoing Registrant Obligations