Chapter Eight – Financial Services

Article 800: Purpose

The purpose this Chapter is to promote an efficient, open, and sound financial services sector within Canada.

Article 801: Scope and Coverage

1. This Chapter applies to any measure adopted or maintained by a Party relating to:
   1. a financial service supplier of another Party;
   2. an investor of another Party, and an investment of that investor, in a financial services supplier in the Party’s territory; or
   3. trade in financial services within Canada by a financial service supplier.

2. This Chapter does not apply to procurement by a Party of a good or service, including a financial service, purchased for governmental purposes, and not with a view for commercial sale or resale or for use in the production or supply of a good or service for commercial sale or resale, whether or not that procurement is a covered procurement within the meaning of Article 504 (Scope and Coverage).
3. This Chapter does not apply to a measure adopted or maintained by a Party relating to:
   1. an activity or a service forming part of a public retirement plan or statutory system of social security; or
   2. an activity or a service conducted for the account or with the guarantee or using the financial resources of the Party, including its public entities,

except that this Chapter applies to the extent that a Party allows an activity or service referred to in paragraphs (a) or (b) to be conducted by its financial service suppliers in competition with a public entity or a financial service supplier.

4. This agreement does not apply to a measure taken by a public entity in pursuit of monetary or exchange rate policies.
5. The following provisions do not apply to a measure that falls within the scope of paragraph 1:
   1. 1. Article 201 (Non-Discrimination);
      2. Article 306 (Formal Requirements) and Article 307 (Market Access – Services); and
      3. Part C (Investment) of Chapter 3 (Special Provisions) including the application of Article 313 (Performance Requirements) to an incentive pursuant to Article 319.2(c) (Scope and Coverage).

Article 802: Formal Requirements

1. A Party may require that an investor, or its investment, in a financial service supplier:
   1. have a local agent or local address for service;
   2. post a bond or other form of financial security;
   3. establish or contribute to a trust account or to a compensation fund;
   4. maintain a particular type and amount of insurance or other similar guarantee;
   5. maintain and provide access to records; or
   6. obtain a licence, registration, or certification,

as a condition for carrying on business, or establishing or acquiring an enterprise in its territory, provided that such requirements are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination.

2. A Party may require an investor of another Party, or its investment, in a financial service supplier to provide information concerning that investment, solely for information or statistical purposes. The Party shall protect confidential information from disclosure that would prejudice the competitive position of the investor or the investment. Nothing in this paragraph prevents a Party from obtaining or disclosing information in connection with the equitable and good faith application of any applicable laws.
3. A Party may require that a financial service supplier:
   1. have a local agent or local address for service;
   2. post a bond or other form of financial security;
   3. establish or contribute to a trust account or to a compensation fund;
   4. maintain a particular type and amount of insurance or other similar guarantee;
   5. maintain and provide access to records; or
   6. obtain a licence, registration, or certification,

as a condition for supplying a financial service in or into its territory, provided that such requirements are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination.

Article 803: Market Access – Financial Services

1. A Party shall not adopt or maintain any measure that:
   1. imposes limitations on:
      1. the number of financial service suppliers, whether in the form of numerical quotas, monopolies, exclusive service suppliers, or the requirement of an economic needs test;
      2. the total value of financial service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;
      3. the total number of financial service operations or the total quantity of financial services output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test; or
      4. the total number of natural persons that may be employed in a particular financial services sector or that a financial service supplier may employ and who are necessary for, and directly related to, the supply of a specific financial service, in the form of numerical quotas or the requirement of an economic needs test; or
   2. restricts or requires specific types of legal entity or joint venture through which a financial service supplier may supply a financial service.
2. For a measure that falls solely within the scope of Article 801.1(c) to be inconsistent with paragraph 1, it must constitute a demonstrated barrier to:
   1. the free movement of a financial service supplier;
   2. the supply of a financial service; or
   3. investment in a financial service supplier,

within Canada, taking into account the totality of the circumstances.

3. For greater certainty, a mere difference between the respective financial regulatory frameworks of the Parties is not sufficient on its own to establish the existence of a demonstrated barrier in paragraph 2.
4. Nothing in paragraphs 1 through 3 prevents a Party from requiring a financial service supplier to:
   1. supply certain financial services through separate legal entities if, under the law of the Party, the range of financial services supplied by the financial service supplier may not be supplied through a single entity;
   2. be a resident of, or have a commercial presence in, a Province in order to supply a financial service; or
   3. be incorporated in Canada, provided that the measure does not require incorporation under the law of a specific Party.
5. With respect to an investor of another Party in a financial service supplier, nothing in paragraphs 1 through 3 prevents a Party from adopting or maintaining any measure that:
   1. concerns zoning and planning regulations affecting the development or use of land, or other analogous measures;
   2. restricts the concentration of ownership to ensure fair competition;
   3. requires that a certain percentage of the shareholders, owners, partners, or directors of an enterprise be qualified to practice a certain profession;
   4. relates to the acquisition, sale, or other disposition of bonds, treasury bills, or other kinds of debt securities issued by that Party; or
   5. requires a person to be a resident of, or have a commercial presence in, a Province in order to make an investment in the territory of that Province.

Article 804: Recognition of Prudential Measures

1. A Party may recognize a prudential measure of another Party or a non-party in the application of a measure covered by this Chapter. That recognition may be:
   1. accorded unilaterally;
   2. achieved through harmonization or other means; or
   3. based upon an agreement or arrangement with another Party or a non-party.
2. A Party that accords recognition of a prudential measure pursuant to paragraph 1 shall provide adequate opportunity to another Party to demonstrate that circumstances exist in which there are, or would be, equivalent regulation, oversight, implementation of regulation and, if appropriate, procedures concerning the sharing of information between the relevant Parties.
3. If a Party recognizes a prudential measure pursuant to paragraph 1(c) and the circumstances set out in paragraph 2 exist, that Party shall provide adequate opportunity to another Party to negotiate accession to the agreement or arrangement, or to negotiate a comparable agreement or arrangement.

Article 805: Self-Regulatory Organizations

If a Party requires a financial service supplier of another Party to be a member of, participate in, or have access to, a self-regulatory organization to supply a financial service in or into the territory of that Party, or grants a privilege or advantage when supplying a financial service through a self-regulatory organization, then the requiring Party shall ensure that the self-regulatory organization observes the obligations of this Chapter.

Article 806: Prudential Carve-Out

1. Nothing in this Agreement prevents a Party from adopting or maintaining a measure for prudential reasons, including:
   1. the protection of:
      1. investors, depositors, or policy-holders;
      2. consumers of financial services, including enterprises; or
      3. persons to whom a fiduciary duty is owed by a financial service supplier;
   2. the maintenance of the safety, soundness, integrity, or financial responsibility of a financial service supplier; or
   3. ensuring the integrity and stability of the financial system,

provided that the measure is not used as a means of avoiding the Party’s commitments or obligations under this Agreement.

2. Without prejudice to other means of prudential regulation of the supply of financial services, a Party may require the registration of the financial service suppliers of another Party and of financial instruments.
3. The identification of a measure as an exception to Article 803 in a Party’s Schedule to Part VII (Party Schedules) does not mean that the measure identified in that exception cannot otherwise be justified as a measure adopted or maintained for prudential reasons pursuant to this Article.

Article 807: Exceptions

Credit Unions, Trust and Loan Corporations 

1. Article 803 does not apply to:
   1. any existing measure maintained by a Province that requires:
      1. a credit union or a trust and loan corporation to incorporate within its territory;
      2. the head office of a credit union to be located in its territory; or
      3. a trust and loan corporation to be a body corporate to which a Province’s relevant law applies;
   2. the continuation or prompt renewal of a measure referred to in paragraph (a); or
   3. an amendment to a measure referred to in paragraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Article 803.
2. The Territories reserve the right to adopt future measures with respect to credit unions as set out in subparagraphs 1(a)(i) and 1(a)(ii).
3. Article 803 does not apply to a measure adopted or maintained by a Province that allows an extra-provincial credit union to conduct business within its territory, upon the condition that its credit unions may be authorized, unilaterally or by agreement, to carry on business within the jurisdiction where the extra-provincial credit union was incorporated or continued.

Insurance

4. Article 803 does not apply to:
   1. any existing measure maintained by a Party that requires insurance and insurance-related services to be provided through a specific type of legal entity or form of organization;
   2. the continuation or prompt renewal of any measure referred to in paragraph (a); or
   3. an amendment to any measure referred to in paragraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Article 803.
5. For greater certainty, a Party is not required pursuant to Article 803 to allow a type of legal entity or a form of organization for the supply of insurance or insurance related services that was not authorized in its laws as of the effective date of this Chapter.
6. Article 803 does not apply to a measure adopted or maintained by a Province with respect to a public monopoly on some or all forms of motor vehicle insurance, which may include limitations and restrictions on who is permitted to accept applications and premiums for such insurance.

Branching

7. Article 803 does not apply to:
   1. any existing non-conforming measure in respect of an authorized foreign bank under the Bank Act (Canada);
   2. the continuation or prompt renewal of any measure referred to in paragraph (a); or
   3. an amendment to any measure referred to in paragraph (a), to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately before the amendment, with Article 803.
8. Article 803 does not apply to a measure adopted or maintained by the Government of Canada that prevents a trust and loan company, a cooperative credit association, a credit union, or a fraternal benefit society from being established under the financial regulatory framework of Canada as branches of corporations organized under the law of any other Party or non-Party.

Article 808: Legitimate Objective for Financial Services

1. If it is established that a measure falling within Article 801 is inconsistent with this Agreement, that measure is permissible provided that:
   1. the purpose of the measure is to achieve a legitimate objective for financial services;
   2. the measure is not more restrictive to trade in financial services than necessary to achieve the legitimate objective for financial services;
   3. the measure is not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail; and
   4. the measure is not applied in a manner that would constitute a disguised restriction on trade in financial services.
2. For the purposes of paragraph 1(b), a measure shall be considered necessary to achieve a legitimate objective for financial services provided that:
   1. the measure makes a contribution to the achievement of the legitimate objective for financial services; and
   2. there are no reasonably available alternatives that would make an equivalent contribution to the achievement of the legitimate objective for financial services in a less trade-restrictive manner.
3. For greater certainty:
   1. for the purposes of paragraph 1(c), the mere fact that a Party is responsible for the general regulation or supervision of a particular financial service or financial service supplier is insufficient, on its own, to establish that the same conditions do not prevail between the Parties; and
   2. Article 202 (Legitimate Objectives) applies to this Chapter.

Article 809: Non-Disclosure

Nothing in this Agreement requires a Party to furnish or allow access to information related to the financial affairs and accounts of an individual customer of a financial service supplier.

Article 810: Dispute Resolution

1. Chapter Ten (Dispute Resolution) applies as modified by this Article to a dispute relating to the interpretation or application of this Chapter.
2. For consultations pursuant to Article 1003 (Consultations), each Party shall ensure its delegation includes officials with relevant financial regulatory expertise.
3. Within 180 days of this Chapter coming into force, the Parties shall establish and maintain a financial service roster of individuals qualified pursuant to paragraph 6 to serve as panellists in a dispute regarding the interpretation or application of this Chapter. Each Party shall appoint up to five individuals to this roster for a term of five years. A roster member may be reappointed for additional terms.
4. Each Party shall endeavour to appoint at least one member to the financial services roster that is bilingual in English and French. Each Party shall identify which of its roster members are bilingual.
5. If the Parties appoint fewer than 14 financial services roster members or fewer than seven financial services roster members bilingual in English and French, the Secretariat shall develop a supplementary list of qualified individuals or qualified bilingual individuals. The Secretariat shall submit this list to the Internal Trade Representatives for approval, and the individuals approved by the Internal Trade Representatives shall be added to, and form part of, the financial services roster. The Secretariat may add financial services roster members or bilingual financial services roster members in this manner whenever there are fewer than 14 financial services roster members or fewer than seven financial services roster members bilingual in French and English.
6. Financial services roster members shall:
   1. have expertise or experience in financial services law or practice, which may include the regulation of financial service suppliers; and
   2. be independent of the Party making the appointment and not take instructions from a Party.
7. If a complaint concerns the interpretation or application of this Chapter, the following Presiding Body selection procedures shall apply:
   1. the Presiding Body established to consider the dispute under Article 1005 (Establishment of Presiding Body) shall be composed of three panellists, with two panellists chosen from the financial services roster maintained pursuant to paragraph 3 and one panellist chosen from the roster maintained pursuant to Article 1005.2;
   2. within 30 days after the date of delivery by the Complaining Party of a request to establish a Presiding Body, each Disputing Party shall appoint one panellist from the financial services roster maintained pursuant to paragraph 3; and
   3. the two panellists appointed pursuant to paragraph (b) shall, within 30 days after the last of them has been appointed, select the chairperson of the Presiding Body from the roster maintained pursuant to Article 1005.2. If they are unable to agree within that period, the Secretariat shall select the chairperson by lot from the roster.

Article 811: Consultations Mechanism for Discriminatory Treatment

1. If an Initiating Party considers that a measure of a Responding Party that falls within the scope of this Chapter results in discriminatory treatment that adversely affects its financial service suppliers, the Initiating Party may request consultations by delivering a written request concurrently to the Responding Party and the Secretariat. The Secretariat shall provide the other Parties with a copy of the request for consultations received from the Initiating Party within one business day.
2. The request shall specify the measure complained of and describe how it results in discriminatory treatment that adversely affects the financial service suppliers of the Initiating Party. The Responding Party shall accord full and sympathetic consideration to the request.
3. A Party that considers itself to have a substantial interest in the matter may join the consultations by delivering written notice to the other Parties and the Secretariat within 15 days of receipt of the request made pursuant to paragraph 1.
4. For consultations pursuant to paragraph 1, each Party shall ensure that its delegation includes officials with relevant expertise in the regulation of financial services.
5. The Internal Trade Secretariat shall facilitate the consultations.
6. During consultations, the Initiating Party or a Party that has joined the consultations pursuant to paragraph 3 may seek information regarding the measure referred to in paragraph 2, including with respect to:
   1. the Responding Party’s policy objective in establishing the measure;
   2. details of the Responding Party’s measure; and
   3. measures taken by the Responding Party to limit the measure’s potential for adverse effects on another Party’s financial service suppliers.
7. The Initiating Party and Responding Party may, by agreement, request the assistance of one or more relevant financial services experts or CFTA working groups to address the measure referred to in paragraph 2.
8. Parties to the consultations shall endeavour to work together in a collaborative manner to address the adverse effects of the measure referred to in paragraph 2.
9. Five years after the entry into force of this Chapter, the Parties shall review matters brought forward for consultations pursuant to this Article that have not been sufficiently addressed. To the extent that such matters remain unaddressed, the Parties shall reconvene to determine whether this Chapter should be amended to address them.

Article 812: Financial Services – Specific Definitions

For the purposes of this Chapter:

 credit union means, except for the purposes of Article 807.8, a financial service supplier established under provincial or territorial law and regulated by a Province as a credit union, a caisse populaire or a federation of those institutions;

 effective date means the date of entry into force of the Third Protocol of Amendment;

 existing means in effect on the date of entry into force of the Third Protocol of Amendment;

 financial service supplier means a person of a Party that is subject to regulation, supervision and licensing, authorization, or registration under the financial regulatory framework of the Party whose measure is being considered;

financial service supplier of another Party means a financial service supplier, including a branch, operating in the territory of a Party and that is constituted, established, or organized under the law of another Party or is controlled by a financial service supplier of another Party;

Initiating Party means a Party that has requested consultations pursuant to Article 811.1;

investment means “investment” as defined in Chapter Thirteen (Definitions), except that with respect to loans and debt instruments:

1. 1. a loan to or debt instrument issued by a financial service supplier that is an enterprise is an investment only if it is treated as regulatory capital by the Party that has the principal responsibility for the prudential regulation of the financial service supplier; and
   2. a loan granted by or debt instrument owned by a financial service supplier that is an enterprise, other than a loan to or debt instrument issued by a financial service supplier referred to in paragraph (a), is not an investment;

legitimate objective for financial services means fostering competition, efficiency or innovation within the territory of a Party;

 public entity means a central bank or monetary authority of a Party, or any financial service supplier that is owned or controlled by a Party;

 Responding Party means the Party with which an Initiating Party has requested consultations pursuant to Article 811.1;

self-regulatory organization means a non-governmental body, including a securities or futures exchange or market, clearing agency, or other organization or association, that exercises regulatory or supervisory authority over financial service suppliers by statute or delegation from a Party or a regulatory authority of a Party;

trust and loan corporation means, for the purposes of Article 807.1, a financial service supplier that is established or regulated as a trust, loans, or savings institution, including trust institutions, loan institutions, savings institutions, deposit-taking institutions, and similar entities, but does not include a bank or a credit union.