Exempt Market Dealer (EMD): Definition + Case Study

Exempt Market Dealer (EMD)

A CSA-registered dealer category under NI 31-103 that distributes securities under prospectus exemption. Not regulated by CIRO.

Definition

An Exempt Market Dealer is a registered dealer category under NI 31-103 §7.1 that is permitted to trade in securities sold under a prospectus exemption (private placements, accredited investor offerings, $150,000 minimum-amount offerings, and offering memoranda). EMDs are registered directly with the CSA member jurisdictions (OSC, AMF, BCSC, ASC, etc.) and are not under the jurisdiction of CIRO. Common EMD products include private REITs, MICs, oil and gas LPs, private debt, and exempt-market hedge funds. Proficiency requirements for EMD dealing representatives are set out in NI 31-103 §3.10 and accept the CSC, the Exempt Market Products Exam (EMPE), and certain other equivalents. Because EMDs sit outside the CIRO Proficiency Model, the January 1, 2026 CSC retirement did not apply to them; the CSC remains a recognized credential for new EMD registrations. Registrants in EMD roles still owe KYC, KYP, and suitability obligations under NI 31-103 §13.2 to §13.3 and the CSA's Client Focused Reforms (CFR), even though they are not subject to CIRO IDPC Rules.

Source

NI 31-103 §3.10 (proficiency), §7.1 (registration), §13.2-§13.3 (KYC/KYP); CSA companion policy 31-103CP

Where this shows up on the CIRE

Outcome 1.3

Test yourself

Two real CIRE-bank questions on this exact outcome. Click to reveal the answer and the rule citation.

1
A provincial securities commission issues a temporary cease-trade order against a public company's shares. A CIRO dealer member continues to accept client buy orders in those shares on the basis that CIRO rules do not expressly prohibit the trades. Which of the following best describes the firm's position?
Outcome 1.3 · click for answer
A.The firm is correct: CIRO rules govern dealer members, and provincial orders do not bind federally recognized SROs.
B.The firm is incorrect: provincial securities legislation applies to all market participants within that jurisdiction, and CIRO rules coexist with, and do not supersede, applicable provincial law.Correct
C.The firm is correct because the order only binds the issuer and its insiders, not third-party dealers.
D.The firm may continue trading because a temporary order lacks the force of a final decision.
The Canadian securities regulatory framework is built on a cooperative structure in which CIRO rules sit alongside, not above, provincial and territorial securities legislation. A cease-trade order issued by a provincial commission binds all market participants within that jurisdiction, including dealer members and their clients. The absence of a specific CIRO rule repeating the prohibition does not create an exemption.
2
A foreign national wishes to act as a registered representative in Canada. Which regulatory body is primarily responsible for approving the individual's registration?
Outcome 1.3 · click for answer
A.The applicable provincial or territorial securities regulator, with CIRO exercising a co-regulatory role through its approval process under NI 31-103.Correct
B.The Bank of Canada, because registration requirements are set by monetary policy regulations.
C.CIRO alone, because it is the national SRO responsible for all individual approvals at investment dealers.
D.OSFI, because it regulates financial institutions and their employees.
Registration of individuals in the investment industry is governed by NI 31-103, which is adopted by each provincial and territorial securities regulator. CIRO exercises a co-regulatory role through its Approved Person process; an individual must be both registered with the applicable securities regulator and approved by CIRO before acting as a registered representative at a CIRO dealer member. OSFI regulates federally chartered financial institutions but not individual registrations, and the Bank of Canada sets monetary policy rather than registration requirements.

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