Priorities / Facts
Priorities Progress Report
2019-2020 marked the first year of IIROC’s new three-year Strategic Plan, published in June 2019. Many of our supporting strategic priorities represent multi-year programs.
IIROC’s 2019-2020 priorities focused on significant activities and initiatives for completion in support of the Strategic Plan.
As part of our new Strategic Plan, there are seven strategies that underpin our Mission and Vision:
- Deliver Value for Canadians and the Financial System
- Support Industry Transformation
- Leverage Data and Analytics
- Help Firms with Compliance
- Strengthen Enforcement
- Drive Efficiency and Operational Effectiveness
- Attract, Retain and Enable Skilled People
- In keeping with IIROC’s commitment to transparency and accountability to our stakeholders, we are pleased to present a report on our progress on those activities and initiatives. This work complements our day-to-day regulatory work to protect investors and promote healthy Canadian capital markets. We will continue to measure and report on our progress each year.
- An important development during the year was the announcement in December 2019 by the Canadian Securities Administrators (CSA) that it would undertake a review of the regulatory framework for the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA). After extensive dialogue with a diverse number of stakeholders including investors, investment and mutual fund dealers and advisors, professional bodies and industry associations, IIROC developed and published its proposal, Improving Self-Regulation for Canadians. You can read more about IIROC’s proposal and our accomplishments over the past year in the CEO’s message and Key Facts section of this report.
- Dark Blue
- Achieved – completed
- Light Blue
- In progress – work is ongoing
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Deliver Value for Canadians and the Financial System
Deliver Value for Canadians and the Financial System
Work with the CSA to propose rule amendments to help dealers/registrants protect vulnerable investors
In progress – work is ongoing
IIROC participated in the CSA working group to develop a safe-harbour rule to protect vulnerable investors. Proposed rule amendments were published by the CSA on March 5, 2020 for a 90-day comment period.
Begin development of competency profiles for IIROC approval categories of individual registrants
In progress – work is ongoing
Draft competency profiles for Registered Representative and Investment Representative categories are completed. Subject to Board approval in June, IIROC will publish for comment the draft profiles and related consultation paper in the summer of 2020.
Broaden scope of IIROC’s debt transparency program to include both a larger set of corporate bond and government debt information
In progress – work is ongoing
In May 2018, the CSA proposed that IIROC become the government Debt Information Processor (Debt IP), increasing transparency and improving market integrity without duplicating effort or cost. The rule amendment is expected to be published in early June with implementation of Phase 1 following at the end of August 2020. Since July 2016, IIROC has been publishing all corporate debt trades executed on the secondary market by IIROC-regulated firms through our public portal.
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Support Industry Transformation
Support Industry Transformation
Evolve self-regulatory model to more effectively and efficiently serve Canadians
Address industry feedback
In progress – work is ongoing
Establish Industry Transformation Working Group
A cross-functional transformation team comprised of senior IIROC staff was established, and is working to address the industry’s feedback as well as other ideas to support access to advice for investors and reduce unnecessary regulatory burden.
Identify rules and guidance that result in unnecessary process and cost, or that limit the appropriate use of technology
IIROC published several guidance notices over the course of the year on topics including e-signatures, the appropriate use of technology in supervision of account opening for order-execution only dealers, the role of guidance, and electronic complaint record retention. In addition, on March 26, 2020, the IIROC Board of Directors delegated to staff the authority to grant certain exemptive relief for members related to issues arising from the COVID-19 pandemic.
Explore new IIROC membership categories
We continue to explore and consider options to provide tailored and proportionate oversight that is appropriate to current and developing models, and to allow for new types of marketplace entrants.
Investor consultation
New investor research was completed regarding investor needs and preferences with respect to their access to advice, as well as barriers investors face. Research results were published in December 2019 and January 2020. With The Strategic Counsel, IIROC surveyed 2,500 Canadians in early 2020 to measure awareness, understanding and perceptions about regulation of the investment industry and benchmark effectiveness of IIROC mandatory membership disclosure amendments, which took effect in January 2017 and July 2018. Aided awareness of investors working with IIROC-regulated firms increased 10 percentage points, from 19% in 2017 to 29% in 2020. Also, in order to enhance how IIROC handles investor complaints, research with past complainants was initiated, and will be completed in the summer of 2020.
Dealer engagement
A significant amount of engagement with dealers was undertaken in the past year, across a range of topics, including client identifiers, derivatives, and crypto-asset trading platforms. We also spoke with the majority of our dealers to solicit their views regarding the CSA’s review of self-regulation. Strategic discussions were also conducted via the firm Risk-Trend Report reviews.
Collaborate with regulatory partners to improve the efficiency and effectiveness of regulation in Canada
IIROC continues to actively engage and collaborate with its regulatory partners on a wide variety of issues.
Work with CSA on next steps related to Client Focused Reforms and embedded commissions
In progress – work is ongoing
IIROC participated in the finalization of the CSA’s client focused reforms (CFR), which were published in October 2019. IIROC is now in the process of adopting its own CFR rule amendments in accordance with the extended CSA implementation timelines. In February 2020, the CSA (excluding the OSC) published rules banning deferred sales charges (DSCs) for implementation by June 2022. The OSC also published proposed rules restricting DSCs.
Modernizing IIROC’s derivatives rule framework and requirements
In progress – work is ongoing
IIROC’s proposed requirements for Derivatives Modernization, Phase I were published for public comment in November 2019. Work is continuing on Phase II (margin requirements).
Continue to partner with the CSA on the development of a regulatory framework for crypto trading platforms
In progress – work is ongoing
The CSA published “Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets” on January 16, 2020. IIROC continues to work with the CSA on developing and publishing a final regulatory framework for crypto trading platforms.
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Leverage Data and Analytics
Leverage Data and Analytics
Further enhance surveillance system to support the continued evolution of market supervision
In progress – work is ongoing
IIROC completed the implementation of new, leading-edge technology that significantly enhanced our ability to oversee Canada’s capital markets and to protect investors from potential market abuses. To further enhance our surveillance capabilities, we began to explore the use of artificial intelligence (AI) to improve the efficiency of our alert management.
Use leading-edge analytic capabilities (AI, machine learning) and data that IIROC collects for regulatory purposes to improve effectiveness and predictive capabilities
In progress – work is ongoing
IIROC’s internal analytics team continues to work closely with internal business units to leverage data tools, including predictive modeling, artificial intelligence and machine learning, to improve efficiency and automate manual processes where appropriate.
Continue to enhance data-sharing platform and capabilities
In progress – work is ongoing
We continue to support the CSA with the launch of their Market Analytics Platform (MAP). We have implemented processes to securely transfer both equity and debt trade data daily using secure cloud and “big data” capabilities. Once the CSA completes the implementation of their MAP system, full deployment of the daily data transfer will begin.
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Help Firms with Compliance
Help Firms with Compliance
Implement the Plain Language Rulebook (PLR) and training for dealers and staff
In progress – work is ongoing
PLR implementation deadlines have been extended to align with the CSA’s revised implementation schedule for the client focused reforms. Extensive internal and external training regarding the new requirements was completed.
Commence modernization of IIROC’s approach to supervision
In progress – work is ongoing
IIROC compliance teams are actively working together to enhance our risk-based approach, to streamline, standardize and optimize examinations, and to assess where we can reduce burden on dealers, while maintaining investor protection. Due to COVID-19, in-person exams were postponed, with a focus on updating our approach to conduct supervision remotely.
Develop dealer report cards specific to market regulation compliance
In progress – work is ongoing
Initial focus has been on dealer consultations to ascertain the metrics and comparisons that would be of greatest value. Development continues.
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Strengthen Enforcement
Strengthen Enforcement
Continue to pursue and implement powers, protections and tools
In progress – work is ongoing
In May 2019, Saskatchewan granted IIROC the authority to collect fines through the courts. In December 2019, New Brunswick passed legislation providing IIROC with the full enforcement toolkit: the ability to collect fines through the courts; the authority to collect and present evidence during investigations and at disciplinary hearings; and protection from malicious lawsuits while acting in good faith to carry out its public interest mandate to protect investors.
Approve and finalize the two programs of alternative forms of disciplinary actions
In progress – work is ongoing
In April 2019, IIROC published a second Request for Comments relating to IIROC’s proposed Minor Contravention Program and Early Resolution Offers. We continue to work collaboratively with our CSA partners towards a resolution of issues relating to the proposed programs.
Begin phased implementation of client identifier requirements
In progress – work is ongoing
Further to the approval of the proposed rule amendments by the applicable securities regulatory authorities in April 2019, the first phase of the implementation (debt) came into effect in October 2019. The work on phases 2 and 3 (equities) is progressing well and will be implemented on July 26, 2021. We continue to work closely with the industry via a special implementation committee. A new area on the IIROC website is now dedicated to the implementation of phase 2 and 3 and provides greater transparency to all stakeholders.
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Drive Efficiency and Operational Effectiveness
Drive Efficiency and Operational Effectiveness
Complete transition to a new digital services platform and continue business application renewal, consolidation and integration
Achieved – completed
We completed the transition to a new digital platform and managed services provider, significantly enhancing our internal IT infrastructure services and strengthening our information security posture. In addition, a new human capital management system was successfully implemented across the organization. Multiple other enhancements were made during the year to a variety of other systems to increase efficiency and effectiveness.
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Attract, Retain and Enable Skilled People
Attract, Retain and Enable Skilled People
Evolve our HR and workplace strategies
In progress – work is ongoing
Work is underway on developing our new HR and workplace strategies. HR strategy work will include an evaluation of our organizational culture. We are also evaluating our physical space needs for the future.
Facts
Provided
a variety of compliance education opportunities, including:
existing webcasts
participants
Held
our annual compliance conferences, where staff from IIROC-regulated firms attended:
IIROC Oversees
1 inactive member and
2 pending resignations
Intervened
or varied
affected
Coordinated
trade
orders
Triggered
Assessed
and disgorgement)
against firms and
individuals
Collected
against firms and individuals
fines
assessed
assessed
assessed
Completed
investigations
hearings
(including settlement hearings)
(27 individuals,
10 firms)
Issued
bans
Monitored
6 stock exchanges
Conducted
Compliance firm reviews
Responded to
and
and
business conduct
related to
trading
through IIROC’s Complaints and Inquiries department, which includes front-line staff in Calgary, Toronto, Vancouver and Montreal