IIROC reports policy, enforcement progress

By Staff | August 29, 2018 | Last updated on August 29, 2018
3 min read

IIROC will continue to work with CSA on proposed targeted reforms to harmonize rules on embedded commissions and other dealer regulations, the SRO’s annual report says.

IIROC released its annual report for 2017-18, highlighting the SRO’s progress in the second year of its three-year strategic plan. The plan’s goal is to better protect investors and support Canada’s capital markets, says a release.

Report highlights include working with CSA on proposed targeted reforms, consulting with the industry to understand how IIROC rules affect advice and service as the industry evolves, and obtaining increased legal authority.

In the report, IIROC notes that CSA’s proposed targeted reforms relate to core areas of IIROC dealer rules, such as KYC, KYP, suitability, conflicts and disclosure. The SRO says it will continue to monitor and participate in such regulatory developments, including CSA’s notice on embedded commissions, to ensure harmonization of IIROC and CSA requirements.

IIROC also says it started its strategy to accommodate new business models and gain an understanding of regulatory barriers to innovation through workshops, interviews and a survey of dealers and industry participants.

Read: IIROC’s 2019 priorities include seniors, innovation

In enforcement, six provinces strengthened IIROC’s enforcement abilities over the last 18 months.

For example, in June 2017, Alberta was the first province to grant IIROC statutory immunity and the ability to enhance evidence collection. In June 2018, Quebec’s National Assembly passed amendments enhancing IIROC’s ability to collect evidence from third parties during investigations as well as improved cooperation at the disciplinary hearings stage. Bill 141 also clarified that IIROC has full protection against malicious lawsuits.

Overall, IIROC has court authority to collect fines in P.E.I., Quebec, Ontario, Manitoba, Alberta and B.C., and it has statutory immunity in Quebec, Manitoba and Alberta.

In the report, IIROC president and CEO Andrew Kriegler says the organization will continue to pursue legislation in other provinces.

The report also cites IIROC’s work on its enhanced platform for market surveillance using artificial intelligence and machine learning, as well as its work with registered firms to help with cybersecurity preparedness, including tabletop sessions.

Read: IIROC to require dealers to report cyber breaches

IIROC says it expects to finalize its plain language rule book by year’s end. “Dealers will receive training prior to the introduction of the new rules taking effect, and on an ongoing basis,” says the report.

IIROC by the numbers

IIROC’s total operating expenses for fiscal 2019 are budgeted to increase by $5.1 million to $98.4 million compared to last year’s budget of $93.3 million. The increase is mostly driven by compensation and benefits expenses due to base salary increases, and increased headcount in areas such as information technology.

About 81% of IIROC’s revenue comes from dealer membership fees, as well as market regulation fees. Dealer fees will increase by $513, or 1% for fiscal 2019.

In the report, IIROC notes its financial dependence on firms.

“Failure of a significant number of firms or a relatively large firm would have a critical impact on IIROC’s financial operations,” it says. “Prudent operating cost management and ongoing monitoring of the financial adequacy of firms helps to mitigate this risk.”

As of March 31, 2018, there were 176 IIROC dealers, of which 168 were in good standing, two were in the resignation process and six were suspended.

For full details, read IIROC’s annual report for 2017-18.

Also read:

IIROC suspends expectations for brokerages and trailer fees

Firms inadequately collecting KYC information on seniors: OSC

IIROC proposes OEO eligibility amendments

Advisor.ca staff


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