IIROC proposes using client identifiers

By Staff | May 18, 2017 | Last updated on May 18, 2017
2 min read

IIROC has launched a consultation on using client identifiers, bringing Canada’s rules in line with requirements in the United States and the EU.

The goal, according to the self-regulatory group for investment dealers, is to enhance market integrity, protect investors and address electronic trading risks “while minimizing impact on the investment industry.”

The consultation will include at least two rounds of public comment on the proposed rule changes and the creation of a stakeholder group “to provide further input and to discuss alternative approaches,” IIROC said.

The group’s proposal, published Wednesday, would require client identifiers on every investment order sent or each reportable trade in a debt security.

Dealers would need to provide a Legal Entity Identifier for eligible clients (typically institutional clients such as pension funds) or an account number for clients not eligible to obtain an LEI (typically retail clients).

IIROC said the Canadian Securities Administrators and the Bank of Canada support the proposed amendments.

The changes would align with similar initiatives globally, IIROC said, such as in Europe and the U.S., where regulators require client identifiers “to improve risk management, surveillance and investigatory capabilities.”

IIROC’s rules notice says the group does not currently receive client identity information for each order and trade executed or reported. The proposed changes would allow the regulatory body to better analyze data and conduct surveillance and investigations more efficiently.

“Currently, we compile data from different sources of information (trade tickets and blotters, trade reports, allocation reports etc.) in order to link client identities to each event on the marketplace,” IIROC says. “Depending on the length of the period of review, the liquidity of the security, and the number of clients under review, we may have to send multiple information requests to Dealer Members to validate client order activity. This results in delays in reconciling information into a usable form.”

Comments are due by November 13, 2017. Stakeholders interested in the consultation committee should contact tlam@iiroc.ca by June 19.

IIROC says it will publish a subsequent proposal for further comment.

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Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.