Annual Report 2002-2003 - Investment Industry Regulatory ... · Annual Report 2002-2003 For more...

Annual Report2002-2003

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Message from the Chair 3

The President’s Report 4

Member Regulation 6

Industry Relations and Representation 11

Financial Report 14

Board of Directors and Executive Committee 26

IDA Committees 27

Association Staff 27

National Advisory Committee 28

Member Firms 29

Organizational Chart 36

The Investment Dealers Association of Canada is the national self-regulatory organizationand representative of the securities industry. The Association’s mission is to protect investors

and enhance the efficiency and competitiveness of the Canadian capital markets.

Table of Contents

2002 - 2003 ANNUAL REPORT

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It is my pleasure to present to you the Investment Dealers Association ofCanada’s Annual Report for the year ending March 31, 2003. The past 12 monthshave been very eventful in both the domestic and international capital markets.

We have endured the longest bear market in almost 30 years, operating in anenvironment of regulatory flux, declining investor confidence, corporate andmarket scandals, and a global economy struggling to generate business investmentand jobs. This has meant a challenging and full agenda for the Association.

The year ahead presages equally challenging times which will offer the Associationopportunities to effect positive change that will benefit investors and capitalmarkets participants.

The Association has had a very successful year. The Association has played animportant, constructive role in the important debate on reforming regulatorystructures, content and costs. We have met our regulatory objectives, implementedcost-effective risk strategies, and successfully completed important projectsincluding introduction of the National Registration Database and the first three-year Continuing Education cycle. We have advocated effectively to federal andprovincial governments to introduce tax and policy changes that will promoteefficient and liquid markets, capital formation and economic growth.

Our success is due to the efforts of our Members, our Board of Directors and industryvolunteers, and our staff. It is thanks to their determined efforts that we are able toeffectively carry out our mandate as Canada’s national self-regulatory organizationand representative of the Canadian securities industry.

G. F. Kym AnthonyChair

Message from the Chair

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ANNUAL REPORT 2002 - 2003

The President’s Report

Providing Leadership to Canada’s Capital Markets

During the past year, the IDA has discharged its regulatory and advocacy responsibilities in thecontext of a legislative and regulatory response to undermined trust in the integrity of the NorthAmerican capital markets, renewed initiatives in Canada relating to reforming the regulatorystructure, and a slowly improving equity market.

Shaken investor confidence has resulted in calls for more disclosure, corporate governance re-form and elimination of conflicts of interest. Policy makers have also responded to pressing con-cerns about the security of international money transfers, money laundering and the risks inherentin the use of offshore accounts.

Robust remedial action south of the border, notably new accounting standards and enhancedaccounting oversight, detailed research analysts rules, enhanced disclosure of options and moreprescriptive governance standards, has impacted Canadian capital markets. The need to reassureinvestors and maintain regulatory harmonization has led to similar, but not identical, domesticrules and regulations. The Association has played a constructive role by introducing its own rulesand policies and advocating harmonization, tempered with a made-in-Canada approach.

The result has been an elevated public awareness of the importance of capital markets, an in-creased appreciation of the impact of securities regulation, and a higher profile for the Associa-tion. Going forward, this focus will intensify with the publication of a number of key provincialand federal regulatory initiatives, the IDA’s responses to these recommendations and the reac-tions from stakeholders, including regulators and the media.

Regulatory reform: a window of opportunityRegulatory reform has emerged as a high profile but contentious issue for federal and provincialpoliticians, opening a narrow but inevitably short-lived window of opportunity to create sub-stantive improvements in the efficiency and competitiveness of Canada’s capital markets. Weexpect that there will also be an opportunity to deal with the content of regulation and the role ofself-regulation. The Association will continue to play a leadership role in these debates, ensuringthat its views as the national front-line regulator and industry representative are fully and effec-tively communicated.

In the upcoming year, a key priority will be our response to implementation of Québec’s Bill 107,which will require that the Association be formally recognized as a self-regulatory organizationin Québec. Formal recognition will permit the IDA to continue to play its longstanding role inensuring competitive and well-regulated Québec capital markets. The Association looks forwardto working with the newly created Agence nationale de l’encadrement du secteur financier inachieving our mutually held goals of protecting investors and building a healthy industry.

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Enhancing investor confidenceGoing forward, the Association’s agenda must continue to reflect our focus on enhancing inves-tor confidence in the integrity of the capital markets. Last year’s key initiatives, Policy 11 - AnalystStandards and Regulation 1300 - Beneficial Ownership (addressing offshore accounts), will presentimplementation challenges and opportunities, once approval has been received from securitiescommissions. Both initiatives are key to restoring investor confidence in the integrity of our capi-tal markets. In these and other rules related to governance, disclosure or conflicts of interest, weneed to ensure that the specific needs of the Canadian capital markets, including smaller issuersand investors, are recognized.

Sound regulation and robust enforcementAs our Member Regulation report indicates, we have met and in some instances exceeded ourregulatory objectives. In the coming year, we will maximize the use of risk assessment tools,including the introduction of a Member Firm Comprehensive Compliance report card, and buildon the analysis and data generated by our state-of-the-art electronic Member Firm Complaintsand Settlements Report system (COMSET). We will continue to work with governments and se-curities commissions to secure the more robust enforcement powers we require to fully dischargeour regulatory responsibilities. This will involve, in particular, ongoing dialogue with the Cana-dian Securities Administrators regarding the Uniform Securities Legislation Project and the OntarioGovernment’s Five Year Securities Legislation Review.

Building healthy capital markets and serving our MembersThe Association is a proactive and authoritative participant on the Canadian financial scene, ar-ticulating positions on regulatory and public policy that promote the integrity and efficiency ofcapital markets. We will continue to advocate tax and fiscal policies that promote capital forma-tion and robust economic growth.

The increasing complexity and importance of regulatory developments to Members’ day-to-daybusiness have resulted in calls by the membership for more effective input into the policy devel-opment process and more assistance in navigating the regulatory landscape. We will work topromote active involvement of IDA Member firms in the policy and rule making process andactive participation in the committees, district councils and Board. The Regional Dealer initiativewill continue to be a priority, as we work to alleviate the regulatory burden of costly and duplica-tive regulation without impacting investor protection.

In the upcoming year, the Association will continue its work with governments, securities regula-tors, self-regulatory organizations and market participants to preserve and enhance the integrityand competitiveness of the Canadian capital markets. We will continue to regulate our marketsfirmly, fairly and transparently, in partnership with industry participants, governments and regu-lators at home and abroad.

Joseph J. OliverPresident and Chief Executive Officer

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Member Regulation

Canada’s Front-Line Securities Industry Regulator

The Investment Dealers Association of Canada is Canada’s front-line securities industry regu-lator. Member Regulation is the second largest securities industry regulator in Canada bystaff (215) and allocated budget ($30.5 million). The Association regulates the solvency,

educational proficiency, and sales and business practices of Canadian investment dealers andtheir registered employees. In carrying out these responsibilities, Member Regulation works withsecurities regulators and industry participants throughout the country.

The mandate of Member Regulation is to provide and be seen to provide high quality memberregulation services to firms under our audit jurisdiction through the adoption of policies andadministration of sales and financial compliance and enforcement, resulting in high standards ofbusiness conduct, investor protection and a financially sound securities industry. This is accom-plished through the delivery of services to 1) the public by ensuring the integrity of the market-place; 2) the provincial securities administrators by carrying out our regulatory responsibilities ina transparent and effective manner; and 3) the Members of the Association by delivering ourservices in a cost-effective manner.

Meeting our regulatory objectivesDuring the past year, the Association has met and in a number of instances exceeded its regula-tory objectives. During the past two years, Member Regulation has developed new performancemeasures and benchmarks that permit the Association to more accurately assess and report over-all performance. This year marks the first full year of tracking against the benchmarks and theresults have been impressive.

Effective enforcementEnforcement benchmarks continue to warrant special attention. Not only were the benchmarkresolution rates maintained throughout 2002, the Enforcement 2002 results in terms of number ofhearings, number of suspensions and total amount of fines against firms and individuals werethe highest ever.

During the period of April 1, 2002 to March 31, 2003, the Association issued 52 disciplinary deci-sions that resulted in the termination of two Member firms’ membership and seven permanentbars against individuals, as well as 91 warning letters and 10 individual registration suspensions.The Association levied fines of $3,581,500, of which $1,185,000 were fines against firms, and$2,396,500 fines against individuals. During this time, investigators assessed some 1,258 com-plaints against IDA Member firms and their registrants.

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New enforcement tools and partnershipsThe Case Tracking System (CTS) in Enforcement has now been operational for a full year. Thenew document module, added in August 2002, allows Enforcement staff to better monitor ongoingmatters online.

The Department has entered into strategic alliances with many of our regulatory partners includ-ing the Securities and Exchange Commission and the North American Securities Dealers Associa-tion. The Securities and Exchange Commission and the Enforcement Department are currentlycooperating and assisting each other on several significant issues. In addition, the EnforcementDepartment undertook joint investigations with four Canadian securities commissions and twoCanadian self-regulatory organizations.

Risk assessment strategiesMember Regulation expanded the use of risk assessment strategies that allow the Association tobetter identify, prioritize, mitigate and eliminate high-risk situations. The risk assessment modelfor Financial Compliance was fully implemented on April 1, 2002, permitting Financial Compli-ance to re-allocate examiner resources from low-risk to high-risk firms. The new proficiencyrequirement of a qualifying exam for Chief Financial Officers, developed in conjunction with theCanadian Securities Institute, will also contribute to reducing industry systemic risk.

The risk assessment model for Enforcement was fully implemented with the approval of Policy 8in June 2002 and the October 15, 2002 launch of COMSET, the web-based complaints and settle-ment reporting system.

The integration of the residual risk scores for each Member firm arising from the risk assessmentstrategies in Financial and Sales Compliance will result in an Annual Comprehensive Compli-ance Report Card for each Member. The effectiveness of this initiative will be measured by thereduction in residual risk scores of Member firms over time.

Information systemsThe IDA assisted the Canadian Investor Protection Fund in testing and implementing the newSIRFF system, which became operational July 2002. SIRFF replaced the old OMNIS MFR databasewith a more modern and user-friendly web-based system, which simplified the regulatory filingprocess for Members and increased efficiency.

Registration, Finance and IT staff worked to complete the National Registration Database (NRD)project which will provide industry with the ability to submit all registration documents online toIDA and Canadian Securities Administrators (CSA) staff for review. NRD went live on March 31,2003. The challenge has been to deliver the project on time and on budget in a co-managed envi-ronment and to ensure that the benefits are realized. The Association, with its CSA partners andthe Canadian Depository for Securities, is now addressing implementation issues such as data

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conversion, performance, costs, maintenance and governance. In addition, the IDA has com-mitted to improving the registration process in Québec, with a new registration databasescheduled to be operational at the end of May 2003.

The first Continuing Education three-year cycle came to a successful conclusion December 31,2002. Registration was responsible for tracking completion through a newly implemented CEtracking system and for determining fines for non-completion. This onerous process requiredinput of completion reports (70% of which were received in the last quarter of the year); reportingto Members on outstanding requirements; reconciliation of Member and Association records;and dealing with such collateral matters as extension requests. All of these were handled suc-cessfully and on time.

ReorganizationMember Regulation completed an important reorganization in 2002 with the creation of twonew positions: Vice-President, Professional Standards and Vice-President, Québec.

The Vice-President, Québec is responsible for the Montréal regional office and front-line decisionmaking for all operational regulatory decisions in Quebec. The new position demonstrates theIDA’s commitment to the highest standards of regulation and to a strong presence in Québec.Carmen Crépin was appointed to this position on September 20, 2002.

Maysar Al-Samadi was appointed to the new position of Vice-President, Professional Standardswith responsibilities for national coordination of CSA oversight examinations, as well as manag-ing internal and external reporting requirements and implementation of a quality assurance pro-gram.

Reorganization of workflow enabled Sales Compliance to cut in half the average time betweencompletion of review fieldwork and report issuance.

Finally, Member Regulation adopted a values statement that has since been adopted by theorganization as a whole. A staff committee is responsible for ensuring the promotion of thesevalues.

Responding to a changing and challenging environmentRegulatory Policy staff was actively engaged in the development of new initiatives throughoutthe year. Highlights include completion of a revised version of Policy 11-Analyst Standards inresponse to the CSA public comment process and industry input, and a revised By-law 39 -Principal/Agent, in response to the CSA public comment process and industry input. MemberRegulation has also been actively involved in the Association’s responses to regulatory reforminitiatives, including the BC Securities Commission’s two concept papers and draft legislation;the Ontario Securities Commission’s Fair Dealing Model; the Uniform Securities Legislation

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Blueprint; and the Ontario government’s Five Year Review. The Division has provided writtensubmissions to the federal government supporting the the establishment of six Integrated MarketEnforcement teams dedicated solely to capital markets fraud cases and the Five Year ReviewCommittee’s recommendation that the IDA (and other self-regulatory organizations) be grantedadditional enforcement powers.

Working with our CSA partnersIn conjunction with provincial securities commissions, the IDA participated in 1) the introductionof the NRD Database; 2) as a member of the Canadian Capital Markets Association, the proposedmove to straight-through processing (STP) and 3) the debt market regulation project. Other jointprojects included the Conflicts of Interest Rules, the Offshore Accounts survey and the first con-ference ever held in Canada on self-regulation, attended by more than 250 delegates.

Canadian Securities Administrators continued to rely on the IDA for direct industry regulation ofIDA Member firms across Canada in 2002. The CSA conducted a number of oversight examina-tions in British Columbia, Québec, and Ontario. CSA oversight examinations continued to chal-lenge our structure as a national organization. The IDA/CSA Oversight Committee will considerissues such as better coordination of CSA on-site examinations, the by-law approval protocol,and development of objective audit benchmarks and standards.

The Association has an application for approval pending in Manitoba and anticipates submittingits application for formal recognition as an SRO with the Government of Québec.

Paul C. BourqueSenior Vice-President, Member Regulation

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Appendix 1: IDA Board of Directors - Approval Highlights

June 2002

• By-law 8 – Resignations and amalgamations• By-law 11 – Appointment of retired industry directors to District Council• By-law 29.6A – Referral arrangements• By-law 37 – Arbitration and The Centre for the Financial Services OmbudsNetwork• Regulation 100 – Capital and margin requirements for capital trust securities• Regulation 200 – Minimum records• Regulation 2100 – Inter-dealer bond brokerage systems• Policy 8 – Reporting and recordkeeping requirements (housekeeping amendment)

October 2002

• By-laws 1 and 29 – Conflicts of interest and client priority• By-law 5.6 – Small investments by industry investors in another Member• By-law 29.7 – Advertisement, sales literature and correspondence• Regulation 100 – Capital share and convertible and exercisable security offsets• Regulation 100 – Positions in and offsets involving interest rate and total performance swaps• Regulation 800.49 – Broker-to-broker trade matching utility• Form 1 – Amendments to Statements B and C relating to custodial agreements

January 2003• By-law 1 – Definition of approved person• By-law 40 – National Registration Database• Regulation 200 – Client statements

April 2003

• By-law 3 – Entrance annual and other fees• By-law 10.7 – Past Chair of the NAC• By-law 39 – Principal and agent relationships• Regulation 100 – Positions in and offsets involving exchange traded derivatives• Policy 4 – Minimum standards for institutional account opening, operation and supervision• Policy 6 – CFO qualifying examination• Policy 11 – Analyst standards

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Industry Relations and Representation

The Industry Relations and Representation Division is the spokesperson for the securitiesindustry and IDA Member firms on matters of advocacy and policy development. It bringstogether views of Member firms through its committee structure in the development of

public and regulatory policy, including fiscal and tax policy, and the promotion of efficient andliquid markets, capital formation and economic growth. In carrying out these responsibilities, theDivision works through regional District Councils, national committees and industry profession-als, and interacts with securities commissions in responding to policy initiatives. A key objectiveof the Division is to improve the business climate in Canada and preserve the integrity of publicfinances for federal and provincial governments.

Promoting efficient markets, capital formation and economic growthOver the last year the IRR Division has been active in carrying out research and providing com-mentary to governments on the need for tax and regulatory initiatives to promote efficient capitalmarkets and capital formation. The IDA’s October 2002 submission to the federal governmentrecommended that the government: reduce the capital gains inclusion rate from 50% to 25% onnew offerings of shares of small, publicly listed companies; broaden Qualified Limited Partner-ship rules to encourage greater participation in venture capital investments by institutional in-vestors; broaden the capital gains tax rollover provision to allow for additional deferment of capitalgains on reinvested small business share proceeds for angel and venture capital investors; andincrease the present RRSP annual contribution limit in phased annual increments over the nextfive years to a level of $27,000 per year. The federal government moved on three of four of theserecommendations through technical improvements to QLPs and the capital gains rollover provi-sion, and a modest, phased increase to $18,000 in the RRSP contribution limit.

The IRR Division continues to participate in groups such as the Retirement Income Coalition, theCoalition for Abolition of Capital Taxes, the Financial Services Council and the Toronto FinancialServices Alliance, which have common interests with our Members in promoting specific tax andregulatory policy initiatives. Over the past year, efforts of these groups have contributed to policysuccesses in at least two areas – increased RRSP contribution limits and the phased elimination offederal capital taxes. Work done by the Division in the planning and setup of the ombudserviceinfrastructure for the securities industry came to fruition last year with the fall launch of theOmbudsman for Banking Services and Investments.

The Association was active in the provincial policy arena as well. A pre-budget submission wassent to the Minister of Finance in British Columbia advising on measures in support of capitalformation, job creation and growth in BC. The Division also made a submission to the BC Minis-ter of Competition, Science and Enterprise containing specific proposals for enhancing Vancouver’sInternational Financial Centre. In Ontario, the Association participated in pre-budget consulta-tions with the Ministry of Finance and responded to the government’s Five Year Review of secu-rities legislation. Commentary was also provided to the commissions in Alberta and Nova Scotiaon the reform of private placement regulations. The resulting reforms, adopted in British Colum-

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bia, Alberta, Saskatchewan, Manitoba, Nunavut, Northwest Territories, Newfoundland andLabrador, Nova Scotia and Prince Edward Island will give small business in these provincesand territories greater financing scope and flexibility in structuring and distributing privatelyplaced securities and will enable more timely and cost-effective capital raising in private markets.

The IDA Executive Committee met with provincial premiers, ministers of finance and senior gov-ernment officials to discuss the direction of public policy and the need for more harmonized anduniform securities regulatory policy. The Executive Committee also met last year with the Gover-nor of the Bank of Canada and his officials, and the Senate Standing Committee on Banking,Trade and Commerce, on matters related to industry developments, budget policy and securitiesregulation.

Cost of regulation and regulatory reformTo address the regulatory burden faced by our Members with respect to multiple regulatory envi-ronments, the Association worked with Charles River Associates in studying the costs of thecurrent regulatory system. This study provided, for the first time, a statistically valid, quantitativeanalysis of the cost of our current multi-jurisdictional regulatory system.

Presentations and submissions – both public and private – were also provided to such initiativesas the Uniform Securities Legislation project of the CSA, the BCSC’s New Proposals for SecuritiesRegulation, the Provincial Finance Ministers’ Working Committee, and the Federal government’sWise Persons’ Committee.

Income trustsThe Division has made representations to the Government of Ontario to urge the adoption oflegislative amendments that guarantee unitholders that they will not be held personally respon-sible for damages beyond their initial investment. The government subsequently announced inits March 2003 Budget that legislative amendments will be introduced to remove this uncertaintyover investor liability. It is expected that these changes, once implemented, will enhance institu-tional investment and liquidity in these products.

The Division also successfully worked with the federal Department of Finance in 2002 to clarifythe treatment of mutual fund trusts as “qualified securities” for purposes of securities lendingarrangements.

Fixed income market regulation and transparencyIn the past year the Association continued to participate, along with industry participants, in CSAconsultations on the appropriate level of transparency and regulatory structure for fixed incomemarkets. As a result of these consultations, the CSA has published for public comment revisionsto National Instruments 21-101 and 23-101, the “ATS Rules,” defining the required level of trans-parency for corporate debt securities and providing a three-year exemption to market partici-pants from transparency requirements for government debt securities.

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IRR staff, together with the IDA Capital Markets Committee, played a key role in managing theCanPX transparency project, meeting the regulatory requirements to become the designated in-formation processor for debt markets and putting in place a sound business model for the corpo-ration. The formal application as information processor has been approved by the CSA.

Membership mattersThe National Advisory Committee has asked the Association to examine and, where possible,offer options for improving its communications with the membership. The Division is respond-ing in a number of ways. A new quarterly communication vehicle was launched in 2002 entitledIDA Public Policy Report to provide Members with business intelligence on regulatory develop-ments, government policy, tax developments, and provincial and federal public policies affectingthe securities industry, and to keep them better apprised of Association submissions and otherpolicy initiatives seeking public comment. The publication is delivered via e-mail to IDA Memberfirms and has received favourable comments and suggestions from its readership.

The Division works to bring the views and perspectives of industry participants and small firmsdirectly to bear in the development of national policies through its work with industry commit-tees such as the Regional Dealers Committee, the Capital Markets Committee, the Corporate Fi-nance Committee, the Equity Trading Committee and the Retail Sales Committee. Through theoffices of the Regional Directors, the Division is upgrading its regional communications and ad-vocacy roles. This work is critical to Member communications and the overall effectiveness of theAssociation. The Division also provides quarterly reports on the current state of the domesticsecurities industry, and activities in debt and equity markets which are widely covered in thefinancial press and public media.

IRR has hosted a number of successful events for Members, including Retail Seminars and CEORoundtables. This year, for the first time, a full day Private Client Day was offered just prior tothe Annual Conference in St. Andrews by-the-Sea.

On two occasions during the year, representatives from the Regional Dealers Committee metwith securities commissions to discuss the business environment in which the dealer communityoperates, including the structure of regional dealers, their revenue, costs and profitability.

Also over the last year, Member firms have been offered new services through IDA Megatradeand Bell Canada for audio conferencing, web conferencing and webcasting. The Division hasalso been active in marketing to Members existing group discounts available in a number of pro-grams including: home & auto insurance, employee benefits programs, the FIB Program; and thepackaging of long-distance telecommunications services.

Ian C.W. RussellSenior Vice-President, Industry Relations and Representation

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Grant Thornton LLP

Chartered Accountants

Management Consultants

Auditors' Report

To the Members of Investment Dealers Association of Canada We have audited the balance sheet of Investment Dealers Association of Canada as at March 31, 2003 and the statements of revenues and expenses, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Association’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Association as at March 31, 2003 and the results of its operations and cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Toronto, Canada Grant Thornton LLP May 14, 2003 Chartered Accountants

Royal Bank Plaza

19th Floor, South Tower

200 Bay Street, Box 55

Toronto, Ontario

M5J 2P9

T (416) 366-0100

F (416) 360-4949

E [email protected]

W www.GrantThornton.ca

Canadian Member of Grant Thornton International

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Investment Dealers Association of Canada

Statement of Revenues and Expenses Year Ended March 31 2003 2002 Revenues Members’ annual fees $ 30,299,268 $ 28,586,210 Less – Special reduction 2,000,000 - Net members’ annual fees 28,299,268 28,586,210 Underwriting levies 6,133,736 4,663,894 Registration fees 1,839,300 1,499,050 Interest on investments 328,540 269,315 Other income 383,550 165,324 36,984,394 35,183,793 Expenses Industry Relations & Representation 4,354,756 4,002,543 Member Regulation 22,322,163 20,692,292 Public Affairs 778,079 711,795 Association Secretary 636,655 561,400 Finance and Administration 7,536,447 6,989,411 35,628,100 32,957,441 1,356,294 2,226,352 Discretionary Fund (Note 7) 111,980 (415,504) Excess of revenues over expenses $ 1,468,274 $ 1,810,848

See accompanying notes to the financial statements.

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Statement of Changes in Net Assets Year Ended March 31, 2003 Operating Capital Funded by Internally Accumulated

Invested in Restricted Excess of Net Net

Property and Discretionary Revenues over Assets Assets

Equipment Fund Expenses 2003 2002

Balance, beginning of year $ 2,467,443 $ 4,000,014 $ 5,747,060 $ 12,214,517 $ 10,403,669

Excess of revenues

over expenses - 1,689,830 1,356,294 3,046,124 1,810,848

Special projects - (1,577,850) - (1,577,850) - Depreciation and

amortization (1,018,394) - 1,018,394 - -

Purchase of property

and equipment (net) 1,139,469 - (1,139,469) - -

Balance, end of year $ 2,588,518 $ 4,111,994 $ 6,982,279 $ 13,682,791 $ 12,214,517

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Balance Sheet March 31 2003 2002 Assets Current Cash and cash equivalents $ 19,149,343 $ 16,295,229 Receivables 2,193,359 1,254,584 Prepaids and other 245,761 219,174 Current portion of loans receivable 40,188 53,240 21,628,651 17,822,227 Loans receivable, less current portion (Note 3) 16,981 39,578 Property and equipment (Note 4) 2,588,518 2,467,443 Investments (Note 5) 500 535 $ 24,234,650 $ 20,329,783 Liabilities Current Payables and accruals $ 5,517,989 $ 4,726,755 Deferred revenue 281,933 135,685 Current portion of deferred rental credit 174,922 141,850 Current portion of employee future benefits 126,751 34,524 6,101,595 5,038,814 Deferred rental credit 466,533 475,748 Employee future benefits (Note 6) 3,983,731 2,600,704 10,551,859 8,115,266 Net Assets Invested in property and equipment 2,588,518 2,467,443 Internally restricted Discretionary Fund (Note 7) 4,111,994 4,000,014 Operating capital funded by accumulated excess of revenues over expenses 6,982,279 5,747,060 13,682,791 12,214,517 $ 24,234,650 $ 20,329,783 Commitments and Contingencies (Note 8) On behalf of the Board

Terrance K. Salman, Chair Joseph J. Oliver, President


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Statement of Cash Flows Year Ended March 31 2003 2002 Increase (decrease) in cash and cash equivalents Operating activities Excess of revenues over expenses $ 1,468,274 $ 1,810,848 Depreciation and amortization 1,018,394 1,210,665 Amortization of deferred rental credit (153,061) (446,662) Gain from sale of property and equipment (547) (6,612) 2,333,060 2,568,239 Increase (decrease) in non-cash working capital Receivables (938,775) 91,885 Prepaids (26,587) (27,649) Payables and accruals 791,234 241,795 Deferred revenue 146,248 44,169 Deferred rental credit 176,918 - Employee future benefits 1,475,254 962,185 3,957,352 3,880,624 Financing activity Tenant inducement - 128,600 Investing activities Purchase of property and equipment (1,142,977) (1,355,036) Proceeds from sale of property and equipment 4,055 7,287 Repayment of loans receivable (net) 35,649 9,737 Proceeds from sale of investment 35 - Purchase of investments - (535) (1,103,238) (1,338,547) Net increase in cash and cash equivalents 2,854,114 2,670,677 Cash and cash equivalents, beginning of year 16,295,229 13,624,552 Cash and cash equivalents, end of year $ 19,149,343 $ 16,295,229


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Notes to the Financial Statements March 31, 2003 1. Nature of operations The Investment Dealers Association of Canada (the “Association”) is an unincorporated association existing through its constitution and by contract. It is not subject to income and capital taxes. The Association is the national self-regulatory organization and representative of the securities industry. The Association’s members play an essential role in the Canadian economy by raising capital for governments and businesses and by helping individuals and institutions invest with confidence in open and fair capital markets. The Association regulates the activities of investment dealers in terms of both their capital adequacy and conduct of business. The Association’s mission is to foster fair, competitive and efficient capital markets by encouraging participation in the savings and investment process, and by ensuring the integrity of the marketplace. The Association has invested in Market Regulation Services Inc. (“RS Inc.”). RS Inc. was incorporated under the Canada Business Corporations Act as a not-for-profit, tax-exempt entity as a result of a joint initiative of the TSX Group of Companies (the “TSX”) and the Association. RS Inc. monitors all securities trading on marketplaces that retain RS Inc. to act as their regulation services provider for compliance with the Universal Market Integrity Rules and marketplace specific rules. The Association, in trust for the beneficial interest of its members, holds a 10% interest in common shares of FundSERV Inc., an organization created as a depository and clearing house for the investment fund industry. The Association, in trust for the beneficial interest of its members, holds a 15.2% interest in the common shares of the Canadian Depository for Securities Limited (the “CDS”), an organization created as a depository and clearing house for the securities industry. 2. Summary of significant accounting policies The Association follows accounting principles appropriate for not-for-profit organizations, in accordance with Canadian generally accepted accounting principles, including the application of disclosures required for investments in related entities not otherwise consolidated or equity accounted.

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Notes to the Financial Statements March 31, 2003 2. Summary of significant accounting policies (continued) Net assets The financial statements have been prepared in a manner which segregates net asset balances as follows: (a) Invested in property and equipment represents the Association’s net investment in

property and equipment which is comprised of the unamortized balance of its capital assets purchased with unrestricted funds.

(b) Internally restricted – Discretionary Fund. The purpose of the fund is to cover

expenses relating to the Association’s disciplinary panels and includes revenues from fines levied as a result of disciplinary decisions, late filing fees, and a portion of the initiation fees from new members. The Association can make payments from this fund for special non-recurring projects that (1) benefit the public and/or (2) generally benefit Canadian Capital Markets, as determined by the Board of Directors or Executive Committee.

(c) Operating capital funded by accumulated excess of revenues over expenses

comprises the remaining excess of revenues over expenses from operations that are available for general operating requirements.

Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and cash equivalents Cash and cash equivalents includes cash on hand, balances with bank net of bank overdrafts and short term investments with maturities of less than one year. Revenue Annual fees are assessed upon the member firms and are recorded as income on a fiscal year basis. Underwriting levies are recognized when the underwriting transaction closes. The current year’s levies reflect transactions for the thirteen months to March 31, 2003 whereas in the prior year levies included transactions for the twelve months to February 28, 2002. Registration fees and other payments are recorded as income on a fiscal year basis.

7

21


Investment Dealers Association of Canada Notes to the Financial Statements March 31, 2003

2. Summary of significant accounting policies (continued)

Property and equipment

Capital assets are recorded at cost. Depreciation and amortization of office furniture and equipment over their useful lives are computed by the straight-line method at 10% per annum, except for computer equipment, which is at 33 1/3% per annum and photocopier equipment, which is amortized at 20% per annum. Leasehold improvements are amortized over the term of the respective leases.

Deferred rental credit and tenant inducements

The values of the rent-free periods and tenant inducements received by the Association under the office leases are being amortized over the term of the leases.

Employee future benefits

The Association accrues its obligation under employee benefit plans and the related costs, net of plan assets, as follows:

The cost of pensions and other retirement benefits earned by employees is actuarially determined using the projected benefit method pro rated on service and management’s best estimate of expected plan investment performance for funded plans, salary escalation, retirement ages of employees and expected health care costs.

For the purpose of calculating the expected return on plan assets, those assets are valued at fair value which is equivalent to the fair market value at March 31.

Past service costs for plan amendments are amortized on a straight-line basis over the average remaining service period of employees active at the date of amendment.

The excess of net actuarial gain (loss) over 10% of the greater of the benefit obligation and fair value of plan assets is amortized over the average remaining service period of active employees.

3. Loans receivable

Loans receivable consist of:

(a) A loan, secured by a first mortgage beneficially owned by the Association, is receivable from an officer of the Association. Repayment term, interest rate and maturity date was negotiated with the Association at the time of granting the loan. The loan is due on July 31, 2003.

(b) Home Computer Purchasing Plan Loans are receivable from employees of the Association. Repayment terms and maturity dates were negotiated with the Association at the time of making the loans. The loans are due on or before December 15, 2005.

8

22


Investment Dealers Association of Canada Notes to the Financial Statements March 31, 2003 4. Property and equipment 2003 2002 Accumulated Net Net Cost Depreciation Book Value Book Value Office furniture and equipment $ 2,296,624 $ 1,390,812 $ 905,812 $ 896,179 Leasehold improvements 2,068,989 1,173,538 895,451 1,005,941 Computer equipment 4,464,491 3,677,236 787,255 565,323 $ 8,830,104 $ 6,241,586 $ 2,588,518 $ 2,467,443 5. Investments, at cost 2003 2002

3913821 Canada Inc. (16% owned) $ - $ 35 Market Regulation Services Inc. (“RS Inc.,” 50% owned) 500 500 $ 500 $ 535

During the year, the Association sold its interest in 3913821 Canada Inc. for proceeds of $35. The Association and the TSX have each guaranteed 50% of an initial loan facility of RS Inc. up to a maximum of $6.5 million ($3.25 million each). At March 31, 2003 no amount was outstanding on the loan facility. 6. Employee future benefits The Association has established a contributory defined benefit pension plan providing pension, other retirement and post-employment benefits for all employees with at least twelve months of continuous service. The plan provides pension benefits that are based on 2% of the highest three year average earnings times the number of years of continuous participation. The Association has also established a Supplementary Executive Retirement Plan (SERP). This plan is not registered under the Income Tax Act nor is it funded externally. The Association has recorded the following information: Pension benefit plan Other benefits plan SERP

2003 2002 2003 2002 2003 2002

Net expense $ 658,200 $ 459,700 $ 247,000 $ 228,000 $ 604,900 $ 533,200

Accrued benefit liability $ 1,188,600 $ 530,400 $ 591,000 $ 373,000 $ 2,330,400 $ 1,731,828

9

23



Notes to the Financial Statements March 31, 2003 6. Employee future benefits (continued) Additional actuarial information about the Association’s defined benefit plans as at March 31 is as follows: Pension benefit plan Other benefits plan SERP

2003 2002 2003 2002 2003 2002

Accrued benefit obligation $ 6,367,500 $ 5,118,600 $ 1,214,000 $ 1,040,000 $ 2,979,400 $ 2,547,000

Fair value of plan assets 5,167,800 5,881,500 - - - -

Funded status - plan

surplus (deficit) $ (1,199,700) $ 762,900 $ (1,214,000) $ (1,040,000) $ (2,979,400) $ (2,547,000)

Fair value of the plan assets is equivalent to fair market value at March 31. The significant actuarial assumptions adopted in measuring the Association’s accrued benefit obligations are as follows (weighted-average assumptions as of March 31):

Pension benefit plan Other benefits plan SERP 2003 2002 2003 2002 2003 2002 Discount rate 7.0% 7.0% 6.5% 6.5% 7.0% 7.0% Expected long-term rate of return on plan assets 7.0% 7.0% - - - - Rate of compensation increase 5.0% 5.0% 4.5% 4.5% 4.0% 4.0% For measurement purposes, inflation of medical expenses was assumed to be 10% decreasing gradually over 5 years to 5%. Inflation of dental costs was assumed to remain constant at 2%. Other information about the Association’s benefit plans is as follows:

Pension benefit plan Other benefits plan SERP 2003 2002 2003 2002 2003 2002 Employer contributions $ - $ - $ 29,000 $ 19,000 $ 6,372 $ - Employee contributions $ 218,900 $ 186,079 $ - $ - $ - $ - Benefits paid $ 145,600 $ 302,512 $ 29,000 $ 19,000 $ 6,372 $240,900

10

24


Investment Dealers Association of Canada Investment Dealers Association of Canada

Notes to the Financial Statements Notes to the Financial Statements March 31, 2003 March 31, 2003 7. Discretionary Fund 7. Discretionary Fund

The Association’s Discretionary Fund (“Fund”) allows the Association to dedicate resources to defray any potential obligations to the Canadian Investor Protection Fund (“CIPF”) in the case of the bankruptcy of any Association’s member. The purpose of the Fund includes payments for special non-recurring projects that (1) benefit the public and/or (2) generally benefit Canadian Capital Markets, as determined by the Board of Directors or Executive Committee.

The Association’s Discretionary Fund (“Fund”) allows the Association to dedicate resources to defray any potential obligations to the Canadian Investor Protection Fund (“CIPF”) in the case of the bankruptcy of any Association’s member. The purpose of the Fund includes payments for special non-recurring projects that (1) benefit the public and/or (2) generally benefit Canadian Capital Markets, as determined by the Board of Directors or Executive Committee. 2003 2002 2003 2002 Revenues Revenues New membership fees $ 131,985 $ 117,861 New membership fees $ 131,985 $ 117,861 Investigation fines 1,419,000 358,546 Investigation fines 1,419,000 358,546 Late filing fines 330,890 267,782 Late filing fines 330,890 267,782 Continuing education fines 143,500 - Continuing education fines 143,500 - 2,025,375 744,189 2,025,375 744,189 Expenses Expenses Member insolvency - CIPF - 1,000,000 Member insolvency - CIPF - 1,000,000 Disciplinary hearings 335,545 159,693 Disciplinary hearings 335,545 159,693 335,545 1,159,693 335,545 1,159,693 Excess of revenues over expenses before Excess of revenues over expenses before special projects 1,689,830 (415,504) special projects 1,689,830 (415,504) Special projects Special projects National Registration Database 1,368,268 - National Registration Database 1,368,268 - Canadian Capital Markets Association Canadian Capital Markets Association – straight through processing 209,582 - – straight through processing 209,582 - 1,577,850 - 1,577,850 - Excess of revenues over expenses 111,980 (415,504) Excess of revenues over expenses 111,980 (415,504) Fund balance, beginning of year 4,000,014 4,415,518 Fund balance, beginning of year 4,000,014 4,415,518 Fund balance, end of year $ 4,111,994 $ 4,000,014 Fund balance, end of year $ 4,111,994 $ 4,000,014

11

11

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12


Notes to the Financial Statements March 31, 2003 8. Commitments and contingencies

As at March 31, 2003, the basic minimum aggregate annual rental payments, excluding GST and occupancy costs, net of expected recoveries from other parties under long term leases with varying expiry dates to May 31, 2009, for the Association's premises are as shown below.

2004 $ 1,594,601 2005 1,641,580 2006 1,652,849 2007 1,221,511 2008 477,377 Thereafter 233,436 $ 6,821,354

The Association is contingently liable for the future rents of its co-tenants, the Canadian Securities Institute and the Montreal Exchange, in the amount of approximately $235,313 at March 31, 2003.

The Association has also entered into agreements to lease office equipment for various periods until 2008. Minimum rent payable for equipment for each of the next five years is as follows:

2004 $ 165,584 2005 149,533 2006 133,784 2007 101,442 2008 20,980 $ 571,323

The Association has also provided a $100,000,000 guarantee on the Canadian Investor Protection Fund (“CIPF”) bank lines of credit. At March 31, 2003 the CIPF has not drawn on these lines of credit.

The Association is contingently liable in the amount of $1,062,500 which represents the Association's 25% share of the development costs of the National Registration Database System ("NRD System"). It is expected that the cost of the NRD System will be funded by fees from the users of the system. No provision has been made in the financial statements for any potential cost to the Association.

9. Financial instruments

The carrying values of the Association’s financial instruments, which consist of cash and cash equivalents, receivables, loans receivable and payables, approximate their fair value due to their relatively short periods to maturity.

The Association does not have significant concentration of credit risk to members.

The Association does not have significant exposure to interest risk.

26


*G.F. Kym Anthony, ChairPresident & Chief Executive OfficerNational Bank Financial Inc.

*Brian Porter, Vice-ChairExecutive Managing DirectorScotia Capital Inc.

*Joseph J. OliverPresident & Chief Executive OfficerInvestment Dealers Association of Canada

*James C. Baillie, Q.C.CounselTorys LLP

Thomas CaldwellChairmanCaldwell Securities Ltd.

Kenneth G. CoplandPresidentKGC Ltd.

*Jacques DaoustChairman of the Board & Chief Executive OfficerBLC - Edmond de Rothschild AssetManagement Inc.

Jean-Pierre De MontignyPresident & Chief Operating OfficerDesjardins Securities Inc.

Ruth Goldbloom, O.C.

*Michael A. Grandin

Paul J. HillPresident & Chief Executive OfficerHarvard Developments Inc.

2003 - 2004 Board of Directors and Executive Committee

*Members of the Executive Committee

Lonsdale W. HollandPresidentBeacon Securities Limited

*John L. Howard, Q.C.

Frank LaferriereChief Financial Officer & Chief Operating OfficerBerkshire Securities Inc.

Dean ManjurisPresident & Managing DirectorBMO Nesbitt Burns Ltée/Ltd.

Thomas S. MonahanManaging DirectorCIBC World Markets Inc.

*Colleen J. MooreheadPresidentE*TRADE Canada Securities Corporation

Bruce A. RamsayChairman & Managing PartnerAcumen Capital Finance Partners Limited

*Gary ReameyPrincipal, CanadaEdward Jones

Alain RhéaumePresident & Chief Executive OfficerMicrocell Telecommunications Inc.

*S. Ross SherwoodPresident & Chief Executive OfficerOdlum Brown Limited

*Terrance K. Salman, Past ChairChairman, President & Chief Executive OfficerSalman Partners Inc.

Debra Hewson, NAC ChairVice President & Chief Operating OfficerOdlum Brown Limited

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Audit CommitteeChair John L. Howard, Q.C.

Compliance and Legal SectionChair Donald BurwellEdward Jones

Education and Proficiency CommitteeChair Kristine VikmanisBMO Nesbitt Burns Inc.

Financial Administrators SectionChair Norman K.J. GrahamScotia Capital Inc.

Human Resources CommitteeChair Gary ReameyEdward Jones

Industry Relations and RepresentationCommitteeChair G.F. Kym AnthonyNational Bank Financial Inc.

Member Regulation Oversight CommitteeChair Brian PorterScotia Capital Inc.

Regional Dealers Committee - ExecutiveChair S. Ross SherwoodOdlum Brown Limited

Retail Sales CommitteeChair Daniella DimitrovDundee Securities Corporation

A complete list of committees and membershipis available at the IDA website, www.ida.ca

IDA Committees

Joseph J. OliverPresident & CEO

Paul C. BourqueSenior Vice-President, Member Regulation

Keith RoseSenior Vice-President, Finance &Administration

Ian C.W. RussellSenior Vice-President, Industry Relations &Representation

Kenneth A. NasonAssociation Secretary

Maysar Al-SamadiVice-President, Professional Standards

Larry BoyceVice-President, Sales Compliance

Richard CornerVice-President, Regulatory Policy

Connie CraddockVice-President, Public Affairs

Carmen CrépinVice-President, Québec

Warren FuntVice-President, Member Regulation, WesternCanada

Wes HenryVice-President, Finance

Louis PiergetiVice-President, Financial Compliance

Aleksandar PopovicVice-President, Enforcement

Association Staff

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Ronald BeerNewfoundland District Council ChairRBC Dominion Securities Inc., St. John’s

Robert O’HanleyPrince Edward Island District Council ChairCIBC World Markets Inc., Charlottetown

Tom PurvesNova Scotia District Council ChairScotia Capital Inc., Halifax

John FitzpatrickNew Brunswick District Council ChairTD Waterhouse Canada Inc., Saint John

Gérard TaillonQuébec District Council ChairBMO Nesbitt Burns Inc., Montréal

Nelson MacDonaldOntario District Council ChairCitigroup Global Markets Canada Inc., Toronto

Alan DunnettManitoba District Council ChairRBC Dominion Securities Inc., Winnipeg

Brad EnsSaskatchewan District Council ChairCIBC World Markets Inc., Saskatoon

Rob JenningsAlberta District Council ChairJennings Capital Inc., Calgary

Debra HewsonPacific District Council ChairOdlum Brown Limited, Vancouver

Ray SmallwoodNational Advisory Committee Past ChairCIBC World Markets Inc.

Ex-officio members:

Ian C.W. RussellSenior Vice-President, Industry Relations &RepresentationInvestment Dealers Association of Canada,Toronto

David BeazleyAtlantic Regional DirectorInvestment Dealers Association of Canada,Halifax

Carmen CrépinVice-President, QuébecInvestment Dealers Association of Canada,Montréal

Morag MacGouganOntario Regional DirectorInvestment Dealers Association of Canada,Toronto

Terry MellingPrairie Regional DirectorInvestment Dealers Association of Canada,Calgary

Glenn KnowlesPacific Regional DirectorInvestment Dealers Association of Canada,Vancouver

2003 - 2004 National Advisory Committee

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ABN AMRO Capital Markets Canada LimitedToronto ON

Acadian Securities IncorporatedHalifax NS

Acker Finley Inc.Toronto ON

Acumen Capital Finance Partners LimitedCalgary AB

AGF Securities (Canada) LimitedToronto ON

Altamira SecuritiesToronto ON

Altus Securities Inc.Toronto ON

Ameritrade Canada, Inc.Toronto ON

Archipelago Canada Inc.Toronto ON

Argosy Securities Inc.Richmond Hill ON

Assante Capital Management Ltd.Toronto ON

Banc of America Securities Canada Co.Toronto ON

Barclays Global Investors Services Canada LimitedToronto ON

Beacon Securities LimitedHalifax NS

Benson-Quinn-GMS Inc.Winnipeg MB

Berkshire Securities Inc.Burlington ON

Bieber Securities Inc.Winnipeg MB

Bloomberg Tradebook Canada CompanyToronto ON

BMO InvestorLine Inc.Toronto ON

BMO Nesbitt Burns Inc.Toronto ON

BMO Nesbitt Burns Ltée/Ltd.Montréal QC

BNP (Canada) Securities Inc.Montréal QC

Bolder Investment Partners, Ltd.Vancouver BC

Brant Securities LimitedToronto ON

Brawley Cathers LimitedToronto ON

Broadway Trading Inc.Montréal QC

Burgeonvest Securities LimitedHamilton ON

Byron Securities LimitedToronto ON

Caldwell Securities Ltd.Toronto ON

Canaccord Capital CorporationVancouver BC

Member Firms (as at March 31, 2003)

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Canada Life Securities Inc.Toronto ON

Canadian Shareowner Investments Inc.Toronto ON

CanDeal.ca.IncToronto ON

Cartier Partners Securities Inc.Vancouver BC

Casgrain & Company LimitedMontréal QC

CBID Markets Inc.Toronto ON

Centurion Investment Advisors Inc.Toronto ON

CG&B Investment Services Inc.Markham ON

CIBC Financial Planning Inc.Toronto ON

CIBC Investor Services Inc.Toronto ON

CIBC World Markets Inc.Toronto ON

Clarus Securities Inc.Toronto ON

Commission Direct Inc.Toronto ON

Credential Securities Inc.Vancouver BC

Credifinance Securities LimitedToronto ON

Credit Suisse First Boston Canada Inc.Toronto ON

CTI Capital Inc.Montréal QC

Cumberland Asset Management Corp.Toronto ON

Daex Commodities Inc.Winnipeg MB

Darier, Hentsch (Canada) Inc.Montréal QC

Demers Conseil inc.Montréal QC

Desjardins Securities Inc.Montréal QC

Deutsche Bank Securities LimitedToronto ON

Dominick & Dominick Securities Inc.Toronto ON

Dundee Securities CorporationToronto ON

Dunedin Securities Inc.Vancouver BC

E*TRADE Canada Securities CorporationToronto ON

e3m Investments Inc.Toronto ON

Edward JonesMississauga ON

Emerging Equities Inc.Calgary AB

Everest Securities Inc.St-Lambert QC

Fahnestock Canada Inc.Toronto ON

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Fidelity Intermediary Securities Company LimitedToronto ON

Fimat Canada Inc.Montréal QC

First Asset Advisory Services Inc.Toronto ON

First Associates Investments Inc.Toronto ON

First Canada Securities CorporationToronto ON

First Financial Securities Inc.Courtenay BC

First Republic Securities CorporationToronto ON

FirstEnergy Capital Corp.Calgary AB

Foster & Associates Financial Services Inc.Toronto ON

Friedberg Mercantile Group Ltd.Toronto ON

Gary Bean Securities Ltd.Exeter ON

GGA Investment Services Inc.Montréal QC

Global Securities CorporationVancouver BC

Golden Capital Securities Ltd.Vancouver BC

Goldman Sachs Canada Inc.Toronto ON

Goodwood Inc.Toronto ON

Griffiths McBurney & PartnersToronto ON

Hampton Securities LimitedToronto ON

Harris Partners LimitedToronto ON

Haywood Securities Inc.Vancouver BC

HSBC Securities (Canada) Inc.Toronto ON

Iforum SecuritiesMontréal QC

Independent Trading GroupToronto ON

Instinet Canada LimitedToronto ON

Interactive Brokers Canada Inc.Montréal QC

Investors Group Securities Inc.Winnipeg MB

Investpro Securities Inc.Montréal QC

IPC Securities CorporationToronto ON

IPO Capital Corp.Toronto ON

ITG Canada Corp.Toronto ON

J.C. Clark Ltd.Toronto ON

J.F. Mackie & Company Ltd.Calgary AB

32


J.P. Morgan Securities Canada Inc.Toronto ON

Jennings Capital Inc.Calgary AB

Jones, Gable & Company LimitedToronto ON

Jory Capital Inc.Winnipeg MB

K.J. Harrison & Partners Inc.Toronto ON

Kernaghan Securities Ltd.Toronto ON

Kingsdale Capital Markets Inc.Toronto ON

KingsGate Securities LimitedToronto ON

Kingwest and CompanyToronto ON

Laurentian Bank Securities Inc.Montréal QC

Lawrence Capital Partners Inc.Toronto ON

Lazard Canada CorporationMontréal QC

Leduc & Associés Securities Canada Ltd.Montréal QC

Leede Financial Markets Inc.Calgary AB

Lighthouse Private Client CorporationLondon ON

Lightyear Capital Inc.Calgary AB

Loewen, Ondaatje, McCutcheon LimitedToronto ON

Lynch Investments LimitedHalifax NS

M.R.S. Securities Services Inc.Toronto ON

MacDougall, MacDougall & MacTier Inc.Montréal QC

Maison Placements Canada Inc.Toronto ON

Maple Futures Corp.Toronto ON

Maple Securities Canada LimitedToronto ON

Marlow Group Securities Inc.Toronto ON

Matrix Financial CorporationSaskatoon SK

Maxima Capital Inc.Montréal QC

MCA Securities Inc.Montréal QC

MCAP Securities Inc.Toronto ON

McFarlane Gordon Inc.Toronto ON

McLean & Partners Wealth Management Ltd.Calgary AB

MD Management LimitedOttawa ON

Merrill Lynch Canada Inc.Toronto ON

33


Merrill Lynch HSBC Canada Inc.Toronto ON

Middlefield Securities LimitedToronto ON

Milestone Asset Management Ltd.Calgary AB

Mirabaud Asset Mangement (Canada) Inc.Toronto ON

Mirabaud Canada Inc.Montréal QC

MMI Group Inc.Toronto ON

Money Managers Inc.Peterborough ON

Morgan Stanley Canada LimitedToronto ON

National Bank Discount Brokerage Inc.Montréal QC

National Bank Financial Inc.Montréal QC

National Bank Financial Ltd.Toronto ON

NBCNToronto ON

NBCN Clearing Inc.Montréal QC

Newcourt Securities Inc.Toronto ON

Norstar Securities International Inc.Toronto ON

Northern Securities Inc.Toronto ON

Ocean Securities Inc.Halifax NS

Octagon Capital CorporationToronto ON

Odlum Brown LimitedVancouver BC

Omni Capital Inc.Montréal QC

Pacific International Securities Inc.Vancouver BC

Paradigm Capital Inc.Toronto ON

Parkyn, Wermenlinger, Layton Capital Inc.Montréal QC

PEAK Securities Inc.Montréal QC

Penson Financial Services Canada Inc.Montréal QC

Peregrine Financial Group Canada, Inc.Toronto ON

Perry Securities Ltd.Grand Prairie AB

Peters & Co. LimitedCalgary AB

Peterson Findlay Capital Inc.Vancouver BC

Pictet Canada L.P.Montréal QC

Polar Securities Inc.Toronto ON

Pope & CompanyToronto ON

34


Professionals’ Fund Private Wealth ManagementMontréal QC

Qtrade Investor Inc.Vancouver BC

Queensbury Securities Inc.Toronto ON

Questrade, Inc.Toronto ON

Raymond James Ltd.Vancouver BC

RBC Action Direct Inc.Toronto ON

RBC Dominion Securities Inc.Toronto ON

Refco Futures (Canada) Ltd.Toronto ON

Renaissance Capital Inc.Montréal QC

Research Capital CorporationToronto ON

Resolution Capital Inc.Montréal QC

Retirement Option Group Inc.Montréal QC

Roche Securities LimitedEdmonton AB

Rogers Group Investment Advisors Ltd.Vancouver BC

Rothenberg Capital Management Inc.Montréal QC

Salman Partners Inc.Vancouver BC

Salomon Smith Barney Canada Inc.Toronto ON

Sanders Wealth Management Group Ltd.Edmonton AB

Scotia Capital Inc.Toronto ON

Secutor Capital Management CorporationToronto ON

Sprott Asset Management Inc.Toronto ON

Sprott Securities Inc.Toronto ON

Standard Securities Capital Corp.Toronto ON

State Street Global Markets Canada Inc.Toronto ON

Stephen Avenue Securities Inc.Calgary AB

Strategic Capital Partners Inc.Toronto ON

Stuart Investment Management LimitedToronto ON

Swift Trade Securities Inc.Toronto ON

TD Securities Inc.Toronto ON

TD Waterhouse Canada Inc.Toronto ON

Tercyn Capital Inc.Toronto ON

The Financial Centre Securities CorporationGrimsby ON

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The Jitney Group Inc.Montréal QC

Timber Hill Canada CompanyMontréal QC

TradeFreedom Securities Inc.Montréal QC

Trilon Securities CorporationToronto ON

Tristone Capital Inc.Calgary AB

Tuscarora Capital Inc.Toronto ON

TWC Securities Inc.Vancouver BC

UBS Securities Canada Inc.Toronto ON

Union Securities Ltd.Vancouver BC

United Capital Securities Inc.Vancouver BC

W.D. Latimer Co. LimitedToronto ON

Watt Carmichael Inc.Toronto ON

Wellington West Capital Inc.Winnipeg MB

Westwind Partners Inc.Toronto ON

Wolverton Securities LtdVancouver BC

Woodstone Capital Inc.Vancouver BC

Worldsource Securities Inc.Vancouver BC

Yorkton Securities Inc.Toronto ON

yourCFO Advisory Group Inc.Burlington ON

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Organizational Chart

President & CEOJ.J. Oliver

Executive Committee

Board of Directors

IDA Committees

AuditCapital Markets

Chairs’ Consultative CouncilCompensation

Compliance & Legal SectionCorporate Finance

Discount BrokerageEducation & Proficiency

Equity TradingFinancial Administrators Section

FuturesHuman Resources

Industry Relations & RepresentationMember Regulatory Oversight

National AdvisoryNominating

PensionRegional Dealers

Retail Sales

Sr. VP, MemberRegulation

P.C. Bourque

Sr. VP, IndustryRelations &

RepresentationI.C.W. Russell

Sr. VP, Finance &Administration

K. Rose

VP, Public AffairsC. Craddock

AssociationSecretaryK. Nason

District Councils

AlbertaManitoba

New BrunswickNewfoundland

Nova ScotiaOntarioPacificP.E.I.

QuébecSaskatchewan

NationalAdvisory

Committee

District CouncilChairs

IDA Sr. VP,Industry

Relations &Representation

IDA RegionalDirectors

Annual Report2002-2003

For more information about the Investment Dealers Association of Canada:

Website www.ida.ca

Info/Complaint Line (877) 442-IDAC (4322)

Calgary Suite 2300, 355 Fourth Avenue S.W.Calgary, Alberta T2P 0J1Tel: (403) 262-6393 Fax: (403) 265-4603

Halifax Suite 1620, 1791 Barrington StreetHalifax, Nova Scotia B3J 3K9Tel: (902) 423-8800 Fax: (902) 423-0629

Montréal Suite 2802, 1 Place Ville MarieMontréal, Québec H3B 4R4Tel: (514) 878-2854 Fax: (514) 878-3860

Toronto Suite 1600, 121 King Street WestToronto, Ontario M5H 3T9Tel: (416) 364-6133 Fax: (416) 364-0753

Vancouver Suite 1325, 650 West Georgia StreetVancouver, British Columbia V6B 4N9Tel: (604) 683-6222 Fax: (604) 683-3491

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