An exempt market dealer is a securities firm registered specifically to sell securities that are distributed under a prospectus exemption — the trades an issuer or fund relies on when it raises money from accredited investors, through the offering memorandum exemption, or under one of the other National Instrument 45-106 exemptions.
The Alberta Securities Commission’s own registration guidance puts the category plainly: an exempt market dealer is “A firm that sells exempt market products (i.e., products that can be sold without a prospectus).” That is a narrower mandate than an investment dealer, which can trade the full range of listed and exchange securities; an exempt market dealer’s activity is confined to the prospectus-exempt trades a fund or issuer is already entitled to make.
Registered individuals at an exempt market dealer are subject to the education and experience requirements the same guidance points to under “part 3 of NI 31-103”, the instrument governing dealer, adviser and investment fund manager registration. Ontario Securities Commission investor-education material lists exempt market dealer alongside mutual fund dealers, investment dealers and advisers as one of the categories a firm or individual must actually hold before trading, noting that the IFSE Institute “provides courses for individuals who want to be registered mutual fund dealers or exempt market dealers”, and that “Dealers can buy and sell investments for you, but they have to get your permission first” — the same permission-based standard that applies whichever dealer category is involved.
The category matters most where an issuer wants to solicit investors it does not already know. An issuer selling its own securities directly to a short, pre-existing list of insiders under the private issuer exemption does not need a dealer in the transaction at all. The moment a fund or company is actively soliciting new accredited investors or eligible investors it has not dealt with before, an exempt market dealer is typically the firm doing the actual selling, collecting subscription paperwork and confirming investor status.
A Canadian private equity fund wants to raise a $15,000,000 co-investment vehicle from a mix of accredited and eligible investors it does not already have a relationship with, using an offering memorandum. Because the fund’s general partner is not itself a registered dealer and is actively soliciting new investors, it typically engages an exempt market dealer to run the actual trades: collecting subscription documents, confirming each investor’s accredited- or eligible-investor status, and assessing suitability before any money changes hands, rather than the GP personally taking subscription cheques from investors it found through a website.
See also: Accredited investor · Offering memorandum exemption · Private issuer exemption.
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