As this is my last message, I want to take the opportunity to thank my fellow directors and everyone at IIROC for working in the public interest to protect investors and make our capital markets in Canada the envy of many others around the world.

When I was first approached to join the IIROC Board, I saw this as an opportunity to give back by applying decades of my financial services experience in Canada and the United States to making the regulation of one of this country's business pillars better. As I look back, I am immensely proud of the work and the significant progress we have made together to strengthen investor protection. I am equally proud that our capital markets today operate with fairness, transparency and integrity – hallmarks of a strong economy and the foundation of investor confidence, which is essential to Canada's markets.

While there has been a transformative change in the investment landscape, investor demographics, needs and behaviours and the role that regulators play, much has also changed during the last 18 months with IIROC's success in strengthening its enforcement toolkit. Since January 2017, six provincial governments have made changes in their jurisdictions that ensure Canadians receive a high level of investor protection by giving IIROC new tools to hold accountable wrongdoers who breach IIROC rules and harm investors.

More work needs to be done in this area to ensure that all investors from coast-to-coast receive a consistent level of protection but the steps taken by these governments demonstrate confidence in IIROC’s ability to work in the public interest as a national self-regulatory organization.

On behalf of the Board, I thank IIROC for pursuing these important legislative changes so that the hard-earned savings of Canadians are protected and that there are real consequences for those who take advantage of the investing public.

I also want to acknowledge the evolution of IIROC not only as a conduct and prudential regulator but as a market regulator valued by its stakeholders and regulatory partners, including the Canadian Securities Administrators (CSA), which continues to leverage IIROC’s capabilities.

Over the past ten years, IIROC has developed a state-of-the-art surveillance system to support its mandate of monitoring equity and debt trading in Canada. In 2017/18 and beyond, IIROC is building on its market oversight and analytical capabilities in order to make the delivery of securities regulation even more efficient and effective. For example, over the past year IIROC has also taken on the responsibility of bringing transparency to Canada's debt markets as the CSA’s information processor for all corporate debt trading and is poised to broaden that further to include government debt securities. In doing so, the CSA is leveraging the information that IIROC collects to fulfill its market surveillance role without duplication of effort or cost.

These are just a couple of examples of the way IIROC has transformed itself and how it contributes to the regulatory framework across the country. As I conclude my tenure as Chair and as a Director, I look forward to seeing how IIROC continues to be a forward-looking, value-added regulator. I believe it has a solid and strong foundation and a professional and dedicated workforce, which is supported by a knowledgeable and capable Board.

I would like to pay particular tribute to the other IIROC Board Directors, past and present, with whom I have had the privilege of working these many years. Their knowledge and dedication have made this a very fulfilling endeavor and I know my successor will be able to count on their continued support and wisdom. I would also like to thank Andrew Kriegler for his leadership and the entire staff of IIROC for doing the daily work that ensures we protect investors and ensures our capital markets remain a place all Canadians can safely entrust with their investments.

As IIROC enters its second decade in 2018, our challenge – and that of other financial services regulators in Canada and around the world – is to provide a bridge between two expectations: that investors should continue to be protected by regulation, and that the public interest is served by healthy, efficient capital markets that provide the products and services to help Canadians meet their financial goals. We created our now two-year-old Strategic Plan with this in mind.

As a self-regulatory organization with a public interest mandate, we must keep pace as the financial services industry responds to the demands of its customers, in a landscape where the old distinctions between products offered on different platform silos – and the distinctions between the platforms themselves – don’t make as much sense as they used to.

That is why IIROC recently announced a three-part strategy that supports industry transformation and the evolution that is changing the way Canadians make investment decisions.

First, recognizing that these environmental changes are affecting the products and services offered by the firms we regulate, we have enhanced our process for reviewing changes in dealers’ business models to allow for a faster, more efficient process while still adhering to our underlying principles.

We also issued guidance to direct-investing firms to clarify the products, tools and information they can provide on their largely online platforms.

Lastly, we launched a focused, forward-looking consultation with industry to better understand how IIROC’s rules affect the evolution of advice and service, and where we might find opportunities for improvement.

We believe this strategy will go a long way towards ensuring that IIROC’s regulation remains relevant in the face of ongoing change – while ensuring investors are protected no matter how they choose to access investment advice and service.

In recent years, the client-advisor relationship has continued to evolve, particularly as the industry moves to take a more holistic view of their clients and helping them with both their short and long-term financial needs and goals.

IIROC has been working collaboratively with the Canadian Securities Administrators (CSA) in the development of their client-focused reforms, which will fundamentally enhance the client-registrant relationship. The reforms are designed to better align the interests of investment dealers, advisors and representatives with the interests of their clients, improve outcomes for clients and make it clearer to clients the nature and terms of their relationships with registered advisors.

We have actively participated in this important initiative because we share a commitment to requiring registrants to put their clients’ interest first. It is also important that we continue to work together to harmonize these requirements across regulatory platforms and set a high standard of conduct for all registrants.

IIROC believes that the proper management of conflicts of interest, and compensation-related conflicts in particular, which are among the issues dealt with in these reforms, is critical to improving public confidence in our capital markets and the broader financial system.

While technological advancements have contributed greatly to the way in which Canadians manage their finances, they have also created an environment where cybersecurity is a significant, growing and rapidly changing risk.

Individual Canadians and financial services firms share a common goal – to protect the privacy of their information. By working to support the firms we regulate, particularly those that may not have the scale to deal with what is a global threat, we not only enhance their ability to withstand cyberattacks but also enhance the protection of their clients’ personal data.

In 2016 we issued peer-ranked cybersecurity preparedness scorecards to all firms, helping them to identify any gaps in their defences. This past year we followed up with individual meetings with firms and retained an expert external cybersecurity consultant to help them address these gaps. Recently, we conducted industry cyberattack tabletop exercises in Toronto and Calgary to allow firms to test their plans in a safe, collaborative environment. Later this year, we will proceed with a second assessment of firms’ preparedness and finalize a cyber-reporting rule that would help us identify emerging threats and ensure that industry is prepared to meet them. This is just one example of IIROC leveraging its scale and expertise to help firms protect their businesses and their clients as the world in which we operate continues to change.

IIROC’s market surveillance is also evolving to keep pace with the evolution in technology that is affecting trading on Canada’s capital markets. Over the past year, we selected a vendor that will build an enhanced technology platform for market surveillance and trading review and analysis. Using the latest technology, this system will improve IIROC’s surveillance capabilities to allow cross-asset and cross-platform views of trading on Canadian markets. As well, this system will incorporate artificial intelligence and machine learning into IIROC’s surveillance and analysis, allowing us to focus our resources on the greatest risks to market integrity.

Many things are needed for Canada’s capital markets to be healthy, efficient and effective. One of the most critical is investor confidence; for without confidence that the markets and those who work in them operate with integrity, investors simply won’t participate.

Investor confidence demands that wrongdoers are held accountable for their actions and that the consequences are both timely and proportionate to the violation.

In February 2018, we published for comment a proposal for two new alternative forms of disciplinary action. The proposed minor violations and early settlement proposals would allow IIROC to focus enforcement resources on the greatest threats to investor protection. The proposed changes would provide IIROC with added tools and the flexibility to more fairly address varying degrees of rule breaches and improve the timeliness of enforcement actions.

IIROC has also continued to work with our government partners to give us the legal tools we need to provide effective investor protection through our enforcement activities. In fact, over the last 18 months, six provinces have strengthened IIROC’s enforcement abilities.

This spring, Manitoba gave IIROC fine collection authority and added legal protection when carrying out its public interest mandate to protect investors. British Columbia passed legislation giving IIROC legal authority to pursue the collection of disciplinary fines through the courts. In Quebec, recent legislation clarified that IIROC has legal protection when acting in the public interest and gave us more effective authority to collect and present evidence when pursuing wrongdoers.

Last June, the Alberta government passed legislation giving us a complete enforcement toolkit, similar to what we now have in Quebec. The governments in these two provinces have continued to play a leadership role in strengthening investor protection.

Prince Edward Island began this wave of change in early 2017 by providing us with the ability to collect fines through the courts and enhance cooperation at the disciplinary hearing stage. They were shortly followed by Ontario which gave IIROC the ability to collect fines through the courts.

We continue to pursue similar legislation in other provinces, so that investors in every Canadian province and territory have the same protections, regardless of where they live.

This substantial progress speaks to the confidence that the securities commissions that recognize IIROC, and their respective governments are placing in IIROC to provide effective investor protection from coast-to-coast. We are grateful to each of the provinces that has given us the additional tools we needed. We would also like to thank our community partners CARP and Prosper Canada for their support throughout this journey.

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We will continue to keep pace with changes in investor demands, with changes in products and services and in the technological landscape so that we can effectively deliver our mandate in a cost-effective, fiscally prudent manner.

I invite you to read on in this Annual Report to review the significant progress we have made in the second year of our three-year Strategic Plan, which is our roadmap to that future.

I would like to thank IIROC’s Board of Directors for their consistent support, as well as our executive and management teams for their diligence and leadership. I would also like to thank all of my IIROC colleagues for doing the daily work required to protect investors, and to foster fair, efficient and competitive capital markets across the country.

As we mark our 10^th anniversary, it is worth noting that their conscientiousness and persistence allows us to fulfill our mandate. They are committed to carrying out their duties with respect, transparency and fairness for investors and the industry we regulate. Their work has been instrumental in achieving the progress detailed in this Annual Report.