GOAL ONE – PROMOTE A CULTURE OF COMPLIANCE



What we did
Encouraged firms to continue to focus on compliance risk management and internal controls.
How we did it
Issued our Annual Consolidated Compliance Report in January 2015 as a resource for firms to leverage to strengthen their oversight and day-to-day compliance and risk management practices.

The Report: focuses on firm implementation and compliance issues related to the Client Relationship Model’s enhanced suitability assessment obligation, the relationship disclosure document, and fee disclosure; outlines common registration deficiencies including registration applications and changes, notices of termination, and ownership changes of firms; and signals areas of upcoming focus by IIROC, including cyber-security preparedness and best practices, the assessment and monitoring of systemic risk, and electronic trading rule compliance.
Why it matters
Compliance with regulatory requirements and maintaining high ethical standards of fairness and integrity benefits investors, the industry and capital markets overall.

Continued to send examiners into firms to ensure they are complying with business and trading requirements, and are financially solvent.
Conducted 129 Business Conduct Compliance firm reviews, 83 Financial and Operations Compliance firm reviews, and 19 Trading Conduct Compliance firm reviews. We also conducted 23 integrated compliance firm reviews, where two or more types of reviews were conducted at the same time.
Examinations provide insights into challenges and enable firms to correct issues.

Integrated exams provide IIROC examiners with a holistic view of the firm and are more effective.

Continued to communicate regulatory priorities, educate and discuss best practices.
Held our annual Compliance Conferences in Toronto, Montreal and Vancouver. More than 400 staff from IIROC-regulated firms attended in Toronto, with another 74 joining us in Montreal and 152 in Vancouver. The conferences covered a variety of topics and workshops including sessions on prudential regulation, cyber-security, market regulation and the Client Relationship Model.

Provided a variety of compliance education opportunities, including seven educational webcasts that were viewed by more than 40,000 industry participants and five live events attended by 525 industry participants.
As the industry and capital markets continue to evolve and become more complex, it is important for firms to understand regulatory priorities and commit to a culture of continuous learning.

Finalized all elements of the Client Relationship Model (CRM) reform initiative for implementation by IIROC-regulated firms.
Published final remaining rules with specific requirements for pre-trade disclosure of charges, trade confirmation disclosure of debt security trade compensation and relationship disclosure relating to investment performance benchmarks for implementation on July 15, 2014. Further housekeeping changes were published in June 2015.

Compiled and published in October 2014, frequently asked questions (FAQs) to support IIROC firms in implementing CRM requirements. We updated the FAQ document in February 2015 and will continue to update periodically as needed.

New dealer member rules concerning account statement requirements, annual performance and annual fee/charge reports and a new trade confirmation disclosure requirement were approved by the Canadian Securities Administrators in January 2015. These amendments will be phased in over a two-year period ending in 2016.
The CRM initiative enhances investor protection and understanding, and raises industry standards. It improves transparency of fees and account performance, ensures that conflicts are identified and addressed, and enhances suitability assessment. It also helps to promote confidence in the quality and integrity of those who provide advice.

Provided timely and clear guidance on key and emerging issues.
Issued six Guidance Notices in final form, including but not limited to guidance on:
  • expansion of single-stock circuit breakers
  • order execution services as a form of third-party electronic access to marketplace
  • Foreign Organized Regulated Markets
  • part-time chief financial officers
Proactively communicating regulatory expectations promotes a strong culture of compliance; guidance enables firms to exercise an appropriate level of flexibility, reflecting their different sizes and business models.

Advanced the Rule Book Rewrite Project toward implementation.
Published initially for comment the entire set of Plain Language Rules (PLR).

Continued to revise the draft PLR and drafted final responses to comments from the public and CSA staff.
Simpler rules in plain language improve comprehension of regulatory requirements and should enhance compliance.

Drafted proposed amendments to IIROC’s registration rules.
In conjunction with the advancement of the Plain Language Rules project (see above), reviewed and drafted proposed amendments to registration-related rules with the goal of harmonizing IIROC requirements with recent CSA amendments and changes related to continuing education.
Harmonizing IIROC rules with CSA rules helps to streamline the registration process and provides consistency of standards.

Published final guidance outlining common due diligence practices and suggestions for IIROC-regulated firms involved as underwriters in the offering of securities to the public.
Provided final guidance to expand on key principles relating to underwriting due diligence, including due diligence planning, due diligence Q&A sessions, business due diligence, legal due diligence, reliance on experts and other third parties, reliance on the lead underwriter, due diligence record-keeping and the role of supervision and compliance.
The capital-raising process is vital to a vibrant economy. The guidance promotes consistency and enhanced underwriting due diligence practices to assist IIROC-regulated firms to more effectively perform their role and to ensure the protection of the investing public.

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