With today’s announcement, Dealer Members that offer Order Execution Services (OES) to retail investors – sometimes referred to as “discount brokers” – are required to:
- identify clients with trading activity that exceeds established thresholds; and
- have controls in place to address the increased risks that arise when an electronic order is not handled directly by the Dealer Member’s staff.
In addition, participants that execute on behalf of an OES Dealer Member must carry the identity of the identified client on each order message.
“This initiative is part of IIROC’s overall framework to manage the risks, regardless of channel, associated with third-party electronic access to marketplaces,” said IIROC senior VP of Market Regulation, Wendy Rudd. “The guidance and amendments published today complement existing supervisory requirements and provide greater clarity to Dealer Members.”
In April 2013, IIROC published revised proposed guidance related to the supervision of OES account activity, and a proposed rule for supervision of OES and related issues. The final guidance and rule amendments take effect on June 1, 2015.