The New Self-Regulatory Organization of Canada (New SRO) has published its first compliance report summarizing current issues and challenges the New SRO says regulated dealer members should focus on in the coming year.
Entitled Helping Firms with Compliance, the report discusses cybersecurity risk education and the self-assessments firms should conduct, client-focused reform (CFR) rule enhancements, proficiency-related work and continuing education (CE) cycle considerations.
Discussing the efforts of the regulator’s compliance modernization group, the report states that the New SRO will continue to execute compliance programs while also working to improve the programs over time.
“In the near term, most dealers can expect to be examined on the same cycle and in generally the same manner as they were examined prior to the consolidation,” of the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC), the New SRO’s predecessor organizations, the report states.
In looking at cybersecurity, they alert dealers to the existence of a new cybersecurity self-assessment tool. “While the use of the tool will be voluntary, we strongly recommend that all dealers conduct a cybersecurity self-assessment at least once every two years,” they write. The report also raises concerns about dealers lacking adequate documentation and processes for reporting incidents and logging sufficient details.
The report continues, looking at and performance reporting on – a continued area of focus – client identifiers, short selling and failed trades, trading supervision, CFR conflicts of interest, and dealer processes for ensuring representatives make appropriate recommendations. Order-execution-only (OEO) practices, the elimination of the deferred sales charge (DSC) option and outside activities are also discussed, along with registration and proficiency requirements.
“The New SRO’s compliance priorities report helps dealers focus their supervision and risk management efforts to comply with our regulatory requirements,” says the New SRO’s CEO Andrew J. Kriegler.
