Series 63 practice questionhardBroker-dealer definition—Canadian BDs
A Canadian broker-dealer with no office in State T has five existing Canadian clients who temporarily reside in State T during the winter. Under the USA, must the Canadian firm register as a broker-dealer in State T?
- ANo, provided it does not solicit new clients or open an office in State T.✓ Correct answer
- BYes, because it does business with residents of State T.
- CYes, unless all clients are institutions.
- DNo, because Canadian broker-dealers are always exempt.
Explanation
Why A — No, provided it does not solicit new clients or open an office in State T.
Under the USA and NASAA's Canadian BD exemption, Canadian broker-dealers are exempt from state registration when dealing only with existing clients temporarily in the state and having no office there (USA Sec. 401(c)(2)). Soliciting new clients would require registration.
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