Annual Report 2020-21

Message from the Chair

Profile photograph of Paul D. Allison, Chair of IIROC

As I write this letter, I didn’t anticipate we’d still be recovering from a pandemic of this magnitude over a year later. During the last 18 months, the world witnessed the COVID-19 pandemic profoundly affect individuals and change society as a whole. While the past year wasn’t without its challenges, we were united by the fact that we were navigating through this together.

Paul D. Allison

Throughout the global pandemic, IIROC remained focused on its mission to protect investors across the country and support healthy Canadian capital markets. The Board of Directors is proud of the tremendous strides IIROC has made during a period of extreme uncertainty—from quickly pivoting to a remote work environment to managing unprecedented trade volumes.

The market surveillance team successfully conducted surveillance remotely during a time when market volumes were setting records twice what they had ever been before, which demonstrated the organization’s operational resilience and adaptability. IIROC also continued to support our members’ ability to continue to serve their clients by offering exemptive relief in several areas, including the use of wet signatures. While these are just some examples, I continue to be impressed by how the team delivers value for our members and stakeholders in alignment with IIROC’s three-year strategic plan and priorities.

IIROC’s strategic plan outlines where we’re going, how we’ll get there, and what it means for our stakeholders. It reflects external trends and realities with new and increased investments required to support the industry’s transformation as it strives to better serve Canadians and our vision to be a leading-edge regulator—from supporting industry transformation to strengthening enforcement. In addition to the seven strategies that keep us focused on our future direction, IIROC’s commitment to investor protection and healthy capital markets informed our 2021 priorities:

  • Effectively manage issues that arise from the COVID-19 pandemic.
  • Advance various initiatives and commitments related to investor protection.
  • Support industry transformation through the evolution of the self-regulatory model.

We made impressive progress on these priorities and continue to leverage our learnings and input from stakeholders to enhance our approach to regulation.

Over the past year, IIROC released several publications outlining how a new single consolidated self-regulator would protect Canadians and better service the investment industry. In June 2020, IIROC submitted its proposal outlining the benefits of consolidating IIROC and the Mutual Fund Dealers Association of Canada (MFDA). We also engaged Deloitte LLP to do an independent assessment of the cost savings. The report estimates that a consolidated self-regulator would result in up to half a billion dollars in savings for IIROC and MFDA firms and enhance investor protection. Finally, last fall, IIROC issued two independent research studies that highlighted mutual fund advisors and dealers are striving to provide comprehensive financial advice that is in the best interest of Canadian investors, but regulatory burden and silos create unnecessary challenges. We applaud the decision of the Canadian Securities Administrators (CSA) to create a new, single, enhanced self-regulatory organization. The CSA’s decision represents meaningful and impactful change that will foster an innovative and competitive industry, deliver value for investors and is fully supported by both the MFDA and IIROC. The Board looks forward to making important progress on this initiative together.

Personally, I would like to acknowledge my fellow Board members who have played a key role in IIROC’s governance throughout these uncertain times. With a shift to governing virtually, frequent communication enabled the Board to provide counsel and support management throughout the pandemic. My sincere appreciation for your hard work and dedication in support of IIROC’s mandate.

I would also like to extend a warm welcome to three new members who joined IIROC’s Board in September 2020: Malcolm Heins, Jennifer Newman and Laura Tamblyn Watts. Both Malcolm and Laura have extensive, direct experience with seniors and/or vulnerable retail investors, consumers, and pension plans. Jennifer has deep knowledge of financial operations, risk and change management in the pension and banking sectors. The appointments of Malcolm, Jennifer and Laura will complement our existing Board and provide valuable insights to the organization.

On behalf of the Board, I also want to highlight the outstanding leadership of Andrew Kriegler and the executive management team. The Board and I are very pleased by how the management team pushed forward under extraordinary circumstances without disruption. Under Andrew’s leadership, the executive management team have the skills and expertise to continue serving our stakeholders.

Finally, we wouldn’t be here today without the incredible team at IIROC. A heartfelt thank you to every IIROC employee for the important work you do every day to protect Canadian investors. You’ve made us proud. Your unwavering commitment to our purpose, and the dedication you’ve demonstrated in the face of adversity is what makes IIROC’s success possible—now and in the future.

Handwritten signature of Paul D. Allison, Chair of IIROC
Paul D. Allison
Chair of the Board

Responded to

business conduct related investor enquiries
business conduct related complaints
trading related investor enquiries
trading related complaints

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

The market surveillance team successfully conducted surveillance remotely during a time when market volumes were setting records twice what they had ever been before, which demonstrated the organization’s operational resilience and adaptability.

Report from the President and CEO

Profile photograph of Andrew J. Kriegler, President and CEO of IIROC

Crises are hard, but it is only through meeting the challenges head on that the capabilities of a person or of an organization can truly be tested. The pandemic tested all of us: as individuals, as organizations and as a society.

Andrew J. Kriegler

While I must leave the broader question of how well Canada did through the pandemic to be answered by historians, I can say that IIROC came through the challenges of the pandemic with flying colours. We did so because of the strength, dedication and integrity of all our people.

I am proud of my colleagues for everything they have done since the pandemic hit in March 2020. More than that, I’m grateful for not only what has been accomplished over the past year, but especially for how it was accomplished.

We delivered regulation consistently, effectively and flexibly—ensuring that we never lost sight of why the rules are there and what their public policy objective is. We adapted to the reality of remote working and remote regulation, acknowledging the challenges that the investment industry faced. And, we did it recognizing that every one of our colleagues faced their own personal and family challenges and needed us to be flexible with them too.

As with many other organizations though, IIROC’s experience during the pandemic went far beyond a series of responses to realities of working in a public health crisis. We learned an enormous amount about how the financial services needs of Canadians have changed, about how the industry has responded to meet those needs and how regulation needs to continue to adapt as a result.

In some cases, such as the virtual delivery of financial advice, the pandemic was an accelerant, speeding up the adoption of trends that had been underway for some time. Others, such as the sustained doubling of market activity levels, driven in large part by a huge increase in direct retail participation, were a surprise.

In responding to each of these changes, our goal was not only to come up with a quick fix but to ensure our learnings endure post-pandemic. For example, we will be proposing rule changes to codify several pandemic-era exemptions which allowed the financial industry to serve Canadians the way they wanted to be served. Similarly, our market surveillance systems, which coped with an overnight doubling in market activity levels are being strengthened further and made more flexible. Our compliance teams who, for over a year, have been conducting examinations fully remotely, are centralizing their data gathering and analysis activities to become even more efficient.

As we begin to emerge from the pandemic, our plan for an eventual return to office is underway, in accordance with public health guidance. Everything we learned about remote work over the past year will be incorporated in our hybrid working model going forward. For example, our demonstrated ability to work remotely will allow us more flexibility in attracting talent from across Canada and to distribute and manage work more efficiently from coast to coast.

We continue to make great strides to evolve the self-regulatory model to more effectively and efficiently serve Canadians. In December 2019, the Canadian Securities Administrators (CSA) began a review of the regulatory framework for IIROC and the Mutual Fund Dealers Association of Canada (MFDA). On August 3, 2021 the CSA published its position paper regarding the self-regulatory organization (SRO) framework.

IIROC enthusiastically supports the CSA’s decision to create a new, single, enhanced pan-Canadian SRO to deliver efficient and effective regulation in the public interest.

The CSA plan builds on an already strong foundation, and will:

  • deliver value for investors, regardless of where they live, how many assets they have or their level of investing sophistication.
  • foster an innovative and competitive industry to ensure there are investment opportunities and value propositions for existing and evolving Canadian investor needs.
  • make it easier for dealers and their advisors to serve Canadians, regardless of region, firm size or business model.
  • reduce duplicative regulatory burden and complexity, particularly for those running separate IIROC and MFDA platforms, as well as those in Quebec.
  • reduce barriers for current single platform dealers looking to expand their business models.

IIROC supports this initiative completely and congratulates the CSA for taking this important step to serve Canadians more efficiently. This is a massive win for Canadians, for the industry that serves them and for everyone at both IIROC and the MFDA. We’re excited to work more closely with the CSA and our colleagues at the MFDA for the benefit of investors and all stakeholders.

As I mentioned earlier, the unprecedented retail trading activity and trading of “meme” stocks over the last year caused stress to some financial institutions, generating phone delays and electronic platform lapses. While this has traditionally been considered a service issue, increasingly sophisticated technology has resulted in the growing importance of the online delivery of investment services. In fact, the provision of reliable technology support is now considered a fundamental part of the investment services that are being provided by many members. That said, it has become important to gain a better understanding of how service levels and access to online investments could become an explicit investor protection issue.

As such, we have asked all Order-Execution-Only firms to provide detailed historical information related to their online trading availability, functionality and service. We will review the degree to which service interruptions may have resulted in investor access issues. Based on our findings, we will determine an appropriate response.

Rethinking the way we regulate in order to support innovation—all while ensuring investors are protected—also remains top of mind this fiscal year. On March 29, 2021, the CSA and IIROC published a joint staff Notice providing guidance on how securities law requirements apply to crypto asset trading platforms (CTPs) and how the requirements may be tailored by regulators for the CTP business model. We continue to work with the CSA to ensure that CTPs subject to such requirements are integrated into the Canadian regulatory system.

Early in Fiscal Year 2022, we published our plan to establish an Expert Investor Issues Panel (EIIP) and we requested comments on panel composition, selection process, term limits and governance. The EIIP will be a critical, additional contributor to efforts already conducted by IIROC to gauge the public’s views on regulatory initiatives and other public interest matters. It will enable individuals with a wide variety of experience and expertise related to investors to more formally provide valuable input into IIROC’s mandate to protect investors and support healthy capital markets.

Although this past year has been punctuated with uncertainty, IIROC has continued to provide regulation without interruption, and that is largely because of our people—my colleagues at IIROC, our members and stakeholders. I am proud of our collective drive to protect investors and ensure our capital markets operate with integrity every single day.

Since my last letter, we welcomed three new members of IIROC’s executive team: Jennifer Armstrong joined as our new General Counsel and Corporate Secretary, and we celebrated the appointments of Richard Korble as Vice-President, Western Canada and Laura McNeil as our Chief Financial Officer.

We also said farewell to friends and colleagues Lucy Becker, Vice-President, Public Affairs and Member Education Services; Warren Funt, Vice-President, Western Canada; and Doug Harris, Vice-President, General Counsel and Corporate Secretary. They were instrumental in helping me manage the organization over the last several years and will be missed.

I want to echo Paul’s comments and thank all my colleagues for their unwavering dedication and commitment to excellence. I would like to also express thanks to our Board of Directors. The leadership team and I have valued your support, guidance and counsel during these unprecedented times.

After a very difficult period, it is time for some optimism. Canada is turning the page to a post-pandemic future and that bodes well for our economy and for the financial future of Canadians. As their needs evolve, the industry is adapting rapidly to meet them and our regulation is evolving in parallel.

We are also turning the page to the next chapter in the structure of self-regulation. Led by the CSA, and together with our colleagues at the MFDA, the coming years will see IIROC build on our already strong foundation. Together we will create a new and enhanced self-regulatory organization, one which is even more effective and efficient, and will better protect investors and support healthy Canadian capital markets.

An exciting road lies ahead, and I look forward to traveling it together with all of you.

Handwritten signature of Andrew J. Kriegler, President and CEO of IIROC
Andrew J. Kriegler
President and CEO
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Although this past year has been punctuated with uncertainty, IIROC has continued to provide regulation without interruption, and that is largely because of our people—my colleagues at IIROC, our members and stakeholders.

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After a very difficult period, it is time for some optimism. Canada is turning the page to a post-pandemic future and that bodes well for our economy and for the financial future of Canadians.

By the numbers

Coordinated trading halts
Coordinated cease
trade orders
Single Stock Circuit Breakers triggered
Intervened by varying or cancelling trades 74
times affecting
Trades monitored on 6 stock exchanges
(operating 10 separate venues) and 5 equity
Alternative Trading Systems
On-site Business Conduct Compliance firm reviews conducted
On-site Financial and Operations Compliance firm reviews conducted
Integrated on-site compliance firm review conducted

IIROC Enforcement’s current legal authority and protections

IIROC has made significant progress in the following jurisdictions to strengthen investor protection:

Click on the map for an interactive experience.

  • Authority to collect fines
  • Collect and present evidence
  • Statutory immunity
Enforcement’s current legal authority and protections
Province / Territory Date / Legal authority
Yukon November 2018: collect fines and collect/present evidence
Northwest Territories November 2018: collect fines and collect/present evidence
Nunavut November 2018: collect fines and collect/present evidence
British Columbia May 2018: collect fines
Alberta June 2000: collect fines
June 2017: collect/present evidence and statutory immunity
Saskatchewan May 2019: collect fines
Manitoba June 2018: collect fines and statutory immunity
Ontario May 2017: collect fines
Quebec June 2013: collect fines
June 2018: collect/present evidence and statutory immunity
New Brunswick December 2019: collect fines, collect/present evidence and statutory immunity
Nova Scotia October 2018: collect fines, collect/present evidence and statutory immunity
Prince Edward Island January 2017: collect fines
December 2018: collect/present evidence and statutory immunity