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
  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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.

  • 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:

24
Educational webcasts
76,426
Total views of all
existing webcasts
1,334
Industry
participants

Held

our annual compliance conferences, where staff from IIROC-regulated firms attended:

414
Toronto
119
Calgary
112
Montreal

IIROC Oversees

30,451
approved persons
175*
members

Intervened

52
trades
cancelled
or varied
1,896
transactions
affected

Coordinated

1,534
trading halts
105
cease
trade
orders

Triggered

96
single stock circuit breakers

Assessed

$6,812,500
fines (excluding costs
and disgorgement)
against firms and
individuals
$5,875,000
firms
$937,500
individuals

Collected

$6,315,022*
fines (excluding costs and disgorgement)
against firms and individuals
93%
of total
fines

assessed
$5,733,758
of discipline penalties against firms representing
98%
of fines
assessed
$581,264
of discipline penalties against individuals representing
62%
of fines
assessed

Completed

112
enforcement
investigations
37
disciplinary
hearings

(including settlement hearings)
(27 individuals,
10 firms)

Issued

14
suspensions
4
permanent
bans

Monitored

509,073,748
trades on
6 stock exchanges
and 5 equity alternative trading systems

Conducted

79
on-site Business Conduct Compliance firm reviews
80
on-site Financial and Operations Compliance firm reviews
39
on-site Trading Conduct Compliance firm reviews
2
integrated on-site
Compliance firm reviews

Responded to

1,834
investor inquiries
and
772
inquiries
and
613
complaints related to
business conduct
609
complaints
related to
trading

through IIROC’s Complaints and Inquiries department, which includes front-line staff in Calgary, Toronto, Vancouver and Montreal

Published

9
Member Policy rule proposals
4
Member Policy rule amendments
2
Market Policy rule proposals
5
Market Policy rule amendments